HB 162 
.L42 
i Copy 1 

i 



V 



LECTURES 



ON 



POLITLCAL ECONOMY 



^v 



TWO 



LECTURES 



POLITICAL ECONOMY, 



DELIVERED AT CLINTON HALL, 



lEFORE THE 



MERCANTILE LIBRARY ASSOCIATION 



CITY OF NEW-YORK, 



ON THE 231 AND 30th OF DECEMBER, 1831. 



^r, y.. 



WILLIAM BEACH LAWRENCE. 



N K W - Y O R K : 



G . & f ■ . &, H . C A R V I L L . 



M.PCCC.XXXII. 






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TO 



ALBERT GALLATIN, 



THESE LECTURES ARE INSCRIBED, 

AS A SLIGHT TESTIMONY OF THE PROFOUND RESPECT, 
AND AFrECTIONATE REGARD OF 

THE AUTHOR, 



ERRATA. 

Page 11 line 4, insert nol between "was" and "at." 

13 lines 6 & 7, the words "soirf the merca7Ui!isls" are part of the 
translation from Sisniondi. 

37 last line, for " nor" read " or.^' 

38 line 5, supply Me before American. 
44 line '2-i, for ascribed read prescribed. 
60 line 10, for renders read render. 

63 line 6 from the bottom, for nffecicd read effected^ 

67 line 13, in place of for economical readyVom economical. 



LECTURES, &c 



LECTURE I. 

HISTORY OF POLITICAL ECONOMY. 

Gentlemen op the Mercantile Library Association, 

We often hear, not only in private conversation, but 
even in the halls of legislation, that a proposition is well enough 
in theory, but that it will not answer in practice. 

Before entering on the examination of our subject, it may per- 
haps be advisable to inquire, whether there is any meaning in a 
phrase, which has been so frequently repeated, that it has become 
a received adage. If it has the slightest foundation in reason, 
there is an end of Pohtical Economy, and indeed of all science, 
for the objection appUes to one department of learning as much 
as to another, and would go to substitute the untutored cunning 
of a savage for the discriminating judgment of a Ricardo, or the 
expanded intellect of a Brougham. 

Indeed, if there is any branch of moral science, the principles 
of which stand on a firmer basis than the rest, it is the one which 
we are about to discuss. As an eminent disciple of the Ricardian 
school* has truly declared, "Political Economy is analogous to 
the mixed mathematics : the data upon which it proceeds are 
furnished by observation and experience, while the conclusions, 
to which it leads, are attained by a process of ratiocination self- 
evident in all its parts." 

* Torrens. 



But to talk of a theory, as opposed to practice, is a gross per- 
version of language, and a contradiction in terms. A theory or 
science is only a history of practice; it is a collection of ex per 
riments arranged in order and accompanied by an analysis to 
unveil their causes and effects, and unless it accords with the 
results of observation, and bears the test of experience, it is alto- 
gether worthless, while, on the other hand, " without principles 
deduced from analytical reasoning, experience is a useless and a 
blind guide." 

There is no proposition however aljsurd, which statistical data 
may not be brought to sustain ; but it is the part of science to 
distinguish between unconnected events, and those which succeed 
one another as cause and effect. We have, indeed, an ample illus- 
tration of the consequence of deducing inferences from isolated 
facts in the appeals made to poUtical arithmetic by both the 
friends and opponents of the protecting system. On the one 
side, the falling off in the price of most manufactured com- 
modities, which is common to us and to Europe, and is to 
be ascribed to the change in the currency, increased facilities 
of obtaining the raw material, improvements in machinery, 
the altered situation of the world, and other causes, is claimed 
as a proof of the beneficial effects of high tariffs ; on the other, 
the depressed condition of the old southern states, — the necessary 
result of bringing the virgin soil of Illinois and Alabama into com- 
petition with the worn out lands of Virginia and Carolina, is 
wholly im[)uted to tiie same Congressional enactments. 

We do not mean to contend that those who profess to act ac- 
cording to the doctrines of Political Economy, never commit 
mistakes. It very often happens, that an incorrect application is 
made of a principle in itself perfectly unexceptionable. A student 
in Natural Philosophy, regarding solely the vis inerlim of mat- 
ter, and not attending to friction and other countervailing causes, 
might be astonished to find that a body, once put in motion, did 
not continue to move on for ever. But, assuredly, his folly or 
ignorance would be no argument against the study of mechanics, 



neither should the occasional errors of those, who, ia economical 

investigations, overlook the particular circumstances, which mo- 
dify the general proposition, be adduced to maintain the inutility 
of the science, which they cultivate. 

It may also be admitted, that many individuals, like the bour- 
geois gentilhomme in Moliere's Comedy, who had spoken prose 
all his hfe without being aware of it, act unconsciously according 
to the most approved theory of Political Economy ; but, unless 
we condemn grannnar as an unnecessary study, we cannot from 
thence conclude, that an analysis of the principles of a science, in 
which the incidence of taxation and the phenomena of prices are 
explained, is useless to those, who are concerned in making laws, 
(in which functions, as electors at least, we all participate) or to 
the buyers and sellers of commodities, — a class, which, in this 
eminently commercial community, includes directly or indirectly, 
every individual. As is justly remarked by a female writer*, the 
authm' of several popular works on scientific subjects, " Political 
Economy is intimately connected with the daily occurrences of 
hfe, and, in this respect, differs materially from Chemistiy, Astro- 
nomy, or Electricity. The mistakes we may fall into in the latter 
sciences, can have little sensible effect upon our conduct, whilst 
our ignorance of the former may lead us into serious practical 
errors." 

It is scarcely necessary to dilate farther on this topic. However 
agreeable it might be to self-satisfied indolence to prefer common 
sense, or as our eastern bretliren would phrase it, guessing, to 
scientific deductions, the day is gone by for enlightened men to 
attempt to arrest by obsolete maxims all legitimate discussion. 
I cannot but esteem it a cause of congratulation to those who seek 
truth, for its own sake, th;it both the distinguished conventions, 
which have recently had our commercial policy under considera- 
tion, defended their respective positions by a reference to political 
economy. They recognized the science, admitted its authority, 
though they differed in the appUcation of its principles. 

* Mrs. Marcet. 



Political economy is the science, which relates to the nature 
and causes of the wealth of nations. It inquires into the laws, 
wliich govern the production, distribution, and consumption of 
riches, with a view to such an application of human exertions to 
the agents of production supplied by nature, as may lead to the 
greatest possible increase of the comforts and enjoyments of life. 

Proceeding upon the simple and undeniable proposition, that 
nations are only collections of individuals, it naturally concludes, 
that the same rules, which regulate the economy of famiUes, may 
be extended to the management of states. The great end of 
human exertion is the attainment of happiness, and the con- 
duct of all men, not devoid of ordinary prudence, sufficiently 
shews, that an essential means to the accomplishment of that 
object, is a secure provision for the wants, either necessary or 
conventional, to which they have been habituated, with a pro- 
gressive augmentation of comforts and enjoyments. The result, 
which every individual endeavors to obtain for himself, political 
economy aims at procuring for the whole people. By economiz- 
ing labor, and directing tlio energies of nations as well as of indi- 
viduals to those pursuits, for which they possess peculiar facilities, 
it tends to give to all the members of the community increased 
opportunities for the cultivation of those intellectual powers, which 
are the distinguishing attributes of our nature, while the adoption 
of its principles, which demonstrate that the prosperity of one 
country is closely hnked with that of all others, would put an end 
to the ordinary causes of war, and, by appealing to their self-in- 
terest, establish in relation to nations, what Christianity inculcates 
with respect to individuals. 

That Political Economy was neglected by the ancients, and is 
now only beginning to assume an appropriate place among the 
departments of learning is unc|uestionably true; but, if this be an 
objection to the cultivation of our science, it is one equally appli- 
cable to Mineralogy, Botany, and many other studies. Political 
Economy has had difficulties to encounter, to which physi- 
cal speculations are not exposed. Its hberal character, and the 



nature of its principles, which, like the precepts of the gospel, be- 
speak " on earth peace, good-will toward men" have not hitherto 
been calculated to propitiate its reception. 

Besides the errors in economical regulations, which are to be 
ascribed to honest ignorance, many unwise enactments have re- 
sulted from the abuse of power. There are not, indeed, in the 
codes of any country, whatever may have been their professed 
object, many laws, which were really designed to benefit the 
whole community. If we analyse the internal organization of 
states, we shaU find that the population is always divided into 
two classes, the governors and the governed ; and this is true, 
whatever may be the forms, under which the administration of 
public aflJairs is conducted. Sometimes it is a despot, who Uke 
Napoleon, by the force of genius alone, makes every measure 
subservient to his boundless ambition, at others, it is a privileged 
class, like the free citizens in the ancient republics, or the feudal 
barons, who have an hereditary claim to a monopoly of power ; 
while, in most states, those who have their fortunes invested 
in particular branches of industry, with a sagacity equal to that 
of the incorporated trades of the middle ages, or of the British 
corn growers of the present day, cause it to be received as a poh- 
tical axiom, that patriotism forbids all competition in the business 
which they may happen to conduct. Even the agriculturists, 
merchants, and manufacturers, of the same country, instead of 
regarding the prosperity of the several classes as intimately con- 
nected, are taught to believe, that their respective interests are 
essentially hostile and incompatible. Nor are governments found- 
ed on the principles of equal rights, pecuharly exempt from the 
influence of sectional or partial interests. So far is thi.s from be- 
ing the case, that it is yet made a question, whether a represen- 
tative should vote according to the views of his constituents, or 
should follow the course, in his judgment, best calculated to ad- 
vance the general prosperity of the nation. And thus it often 
happens, that to promote the interest of a neighborhood, or of a 
class of individuals, to an inconsiderable extent, by an unwise 



interference with the freedom of industry, many times the amount 
of wealth, which is gained by the favored few, is lost to the coun- 
try and to the world. 

The law of the Egyptians, which prescribed to every individual 
the profession of his ancestor, was analogous to that of the here- 
ditary monarchy or peerage of modern times. It is as easy to 
suppose, that a man is born a carpenter, or a shoemaker, as that 
he comes into the world possessed intuitively of the knowledge 
suitable for a magistrate or a legislator, but when the rule in 
question serves to perpetuate power and wealth in the privileged 
classes, it is in vain that one would attempt to show, that the na- 
tional weal is best promoted by allowing every man to engage in 
the pursuits to which his own interests impel him. 

The system of Sparta, having for its object physical strength 
at any sacrifice of the finer sensibilities of the soul, can scarcely 
find advocates in this enlightened age. That tbe accumulation 
of wealth was not sought for is undeniable, and equally true is it, 
that human happiness was not the aim of the institutions of Ly- 
curgiis. To form a nation of soldiers, not calculated for a period, 
when the rules of warfare are subjected to scientific exactness, 
but for an age, when individual bravery was the one thing need- 
ful, formed the basis of a scheme, at the details of which huma- 
nity is frequently made to shudder. 

The history of Athens may almost be said to be that of Greece, 
for " its glory attracts every eye towards this illustrious republic, 
and places in the shade the numerous allies and rivals of the 
Athenians." But the Athenians having a limited territory, like 
many even of the enlightened nations of oiu" own times, regarded 
the immediate to the neglect of the more remote, but eflicient 
means of procuring a plentiful supply of provisions. Regulations 
against forestaUing, and enactments similar to the corn laws of 
England, are to be found in their code, and were, as it appears 
from history, attended with the consequences inseparable fi'om all 
unwise interference ill matters that should be loft to the foresight 
of individuals. 



Slavery, which generally prevailed in the Grecian common- 
wealths, either under the form of domeptic bondage or of vUlanage, 
produced a most sensible influence on their economical views. By 
the slaves most, if not all of the arts of industry were conducted; 
their services were not confined to mere manual labor, but the 
superintendence of the most extensive manufactories was deemed 
unworthy of the attention of freemen. Much as the maritime 
towns depended on commerce, those individuals, who were di- 
rectly engaged in the manufacturing or vending of commodities, 
never attained that consideration in tlie state, which they so justly 
enjoy in modern times. 

In consequence, however, of the indifference of ancient legis- 
lators to the science of national wealth, industry was generally 
allowed to regulate itself. " It was not," says a German writer 
on the PoUtics of ancient Greece, " considered an object to pre- 
serve the mass of specie undiminished or to increase it ; nothing 
was Icnown of the balance of trade, and consequently all the 
violent measures resulting from it were never devised by the 
Greeks. They had duties as well as tlie moderns, but those 
duties were exacted only for the sake of increasing the public 
revenue, not to direct the efforts of domestic industry, by the 
prohibition of certain wares. There was no prohibition of the 
exportation of the raw produce ; no encouragement of manu- 
factiu'es at the expense of the agriculturists. In this respect, 
therefore, there existed freedom of occupations, commerce, and 
trade. And such was the general custom. As every thing was 
decided by circumstances and not by general rules, there may 
have been single exceptions, and perhaps single examples, where 
the state for a season usm'ped a monopoly. But how feir is this 
from the mercantile and restrictive system of the moderns !"* 

The Romans were a military nation, and their principle was to 
make, by means of the sword, the industry of the whole world 
tributary to their support. Coimnerce, which holds so important 

* Bancroft's Hereen, page 192. 



8 

a rank among the instruments of production, was not deemed 
worthy of the attention of a martial people. The granaries of 
Egypt and Sicily were made subservient to the wants of Rome, 
and, in the latter days of her power, not only were the sanguinary 
amusements of the amphitheatre employed to procure popular 
favor, but dictators and emperors made largesses of provisions and 
money passports to supreme authority. Assuredly, it is not 
among such a people, that we are to look for the science of 
Political Economy. The edicts of the Emperors, however, es- 
tablishing the maximum prices of the various commodities, in 
general request, show that the Romans did not remain always 
strangers to the regulating mania. 

The ancient philosophers ordinarily assumed some arbitrary 
principle, as the foundation of their peculiar systems. To the 
support of these dogmas, all the talents of the schools were directed. 
Riches were regarded as an evil, and the moralists and legislators 
of antiquity concurred in condemning them. Plato compares 
gold and virtue to two weights, placed in a balance, one of which 
cannot rise, unless the other falls, and he suggests that the laws 
should make it penal for a free citizen to engage in trade. Aris- 
totle said that a good republic should never admit artizans to the 
right of citizenship, and that agriculture should be conducted by 
slaves. With regard to the nature of wealth, however, the pre- 
ceptor of Alexander entertained much sounder views than some 
of the practical statesmen of the present age. " Many," says 
he, " suppose wealth to consist in an abundance of coined money, 
because it is the object of usury and commerce. Money is of 
itself without value, and gains its utility only by the law ; when 
it ceases to be current, it loses its value, and cannot be employed 
in the acquisition of necessaries ; and therefore he, who is rich in 
money, may yet be destitute of a bare support. But, it is ridicu- 
lous to say that wealth consists in any thing, of which a man 
may be possessed, and yet die of hunger, as the fable relates of 
Midas, at whose touch every thing became gold." 



Cicero lecomnienJs diligence and parsimony, and refers to the 
" ^Economics" of Xenophon, a work, which, he iuforins us, he 
himself had translated into Latin. But though he speaks of 
wealth in his " Oifices," and classes it among those things, which 
are to be understood as conducing to utility, he regards a know- 
ledge of the functions of capital as the appropriate business of the 
practical money dealer, whom he terms, somewhat ironically, 
optimus vir. If we examine other Latin moralists, we find 
advice, which, like the doctrines of the Cynics, would perpetuate 
poverty and barbarism. " If you would become rich," says Seneca, 
" do not increase your possessions, but diminish your desires." 

If our science was not cultivated among the Greeks and 
Romans, we are not to look for any treatises of Political Economy 
in the middle ages. The oliject then seems not to have been to 
make advances in knowledge, but rather to forget all that centu- 
ries had effected, and to yield up the world a prey to superstition 
and the sword. The feudal system, which generally prevailed, 
at the dawn of modern civilization, was peculiarly adapted to a 
course of restrictive regulations. Not only were there almost 
incessant wars l^etween neighboring kingdoms, but the contests 
among lords, owing a nominal allegiance to the same sovereign, 
were of a scarcely less sanguinary character. If we consider the 
relations, which have generally subsisted between England and 
France, from the very establishment of those monarchies, we 
may form some idea of the state of Europe, when almost every 
two contiguous baronies belonged to rival chieftains. 

The oppression of the barons, and the desii'e of the kings to 
create a power in the state, which might be a counterpoise to that 
of the nobles, gave rise to walled towns, and to the favors which 
were conceded to them. Such was the effect of the industry of the 
burghers, compared with the mode of life pursued by the great lords 
and their retainers, that many of these cities became independent, 
not only of the neighboring barons, but of the so\ereign himself. 
No sooner, however, were these towns relieved from apprehensions 
of the nobility, than the effects of jealously among repubhcs, 



10 

equals in strength and competitors in commerce and manufac- 
tures, began to manifest themselves. Their object was not so 
much their own advancement as the depression of their neighbors. 
In an age, also, when bills of credit and pubhc fimds did not 
exist, and other personal property was principally confined to 
articles of a perishable nature, the hoarding of gold and silver, — 
commodities universally esteemed, was almost the only means by 
which states or individuals could provide for sudden con- 
ingencies. This practice was pursued to a great extent by 
sovereigns in ancient times, and it is even to this day adopted by 
those petty princes of the East Indies, who have not fallen under 
the sway of the English Company. 

To the circumstances, to which we have referred, may he 
ascribed the origin of that restrictive system, which, has caused 
a greater destruction of wealth, and the effusion of more blood, 
than the cruelty of all the Neros, or the ambition of all the 
Napoleons. Though the mercantile theory had no other specious 
foundation, than wliat arose from confounding the instrument of 
interchange with the values of which it serves as a measure, it 
has not yet ceased to govern the councils of nations. The object 
of its advocates, and wars have been carried on for no other 
plausible motive, was to obtain by a multiplicity of regulations, 
such a course of trade, that more coin or bullion might be brought 
into the country, than would be taken from it by the operations of 
commerce. This, it was conceived, could only be effectually 
accomplished by setiding abroad domestic commodities, and by 
refusing to receive articles of foreign fabric. The difference 
between the value of the exports and imports must be paid, it 
was supposed, in the precious metals. Hence the origin of the 
balance of trade, that fi-uitful source of never-ending declamation. 
Though it was readily admitted that, by artificial means, 
too great a proportionate quantity of other articles might be intro- 
duced, yet it was supposed that gold and silver never could 
superabound. If a hundred dollars in gold purchased in a foreign 
country, commodities, which, on being carried to the place, from 



11 

whence the gold was taken, exchanged for two hundred dollars, it 
was conceived, according to this theory, that tlie nation was 
impoverished to the amount of one hundred dollars. That the 
merchant was at the same time enriched by the transaction no 
one could have the temerity to assert. Hence, disregarding the 
mathematical axiom, that the whole is the aggregate of all its 
parts, attempts were made to distinguish between individual and 
national wealth, and voluminous treatises have been written to 
prove that " individual wealtli is often national poverty." 

Colonies have been maintained at an enormous expense, inordcj- 
to compel their inhabitants to regulate their purchases and sales 
agreeably to the views of the metropolis, whose short-sighted po- 
licy generally resorted to measures, calculated to retard the pro- 
gress of both countries. At the brealdng out of our revolution 
it was boldly maintained, that the exclusive enjoyment of the 
colonial trade was essential to the prosperity of England. To 
preseive this monopoly', millions of wealth and tliousands of men 
were sacrificed. Yet with aU these losses, how greatly did the 
ill success of the mother country contribute to her own advan- 
tage ! Compare the gains of the petty colonial trallic, with the 
profits of the present widely extended and mutually beneficial 
commerce between the United States and Great Britain — a com- 
merce equal to that which our country carries on with all other 
foreign states combined, and far greater than the trade of England 
with any other single power. So convinced, indeed, are the 
people of both countries of the happy consequences of the revo- 
lution, that if we can suppose, as an imaginary case, what it is 
hardly proper for a citizen of a great nation to do, that the United 
States shoidd offer to become again an integral part of the British 
dominions, I do not in my conscience believe, that there is a 
single statesman in England, who would advise his sovereign to 
accept our allegiance. 

In despite of the inferences which would flow from the ordinary 
commercial transaction, which we have just pointed out, and 
which is an illustration of the usual course of trade, by employing 



12 

money in common parlance as synonymous with wealth, and 
by following the nomenclature of the mercantile theory, in which 
exchange is said to he, favorable or unfavorable, according as 
the tendency of specie is to flow in or out of the country, widely 
extended prejudices are created in support of the restrictive system. 
As these impressions can only be eradicated by an acquaintance 
with the laws, which regulate international commerce, they are 
likely to remain permanent in the minds of all, who have neither 
leisure nor opportunity for such investigations, that is to say, of 
the mass of the community. 

That the imports incUiding, of course, the precious metals 
must, on an average of j'ears, exceed in value the exports is 
self-evident. The merchants of no country would carry on fo- 
reign trade, without deriving from it profits at least equal to those, 
which might be obtained from other branches of business, but the 
extent of tlie gains cannot be learned from custom-house returns. 
While such statements enable us to judge of the relative quan- 
tities exported and imported in different years, they afford very 
inadequate data, by which to compare the exports and imports 
with one another. In some cases imported articles are put down 
at the invoice prices of the foreign country ; in others, an addi- 
tional per centage is made to the original charge ; while, in others 
again, especially where the minimum principle applies, an arbitrary 
price has been assumed as the rule by which the tables are formed. 
In the estimate of our exports, no regard is had to freight, which, as 
well that for the transportation of the raw produce, as of the return 
cargoes has, in our trade with foreign nations, been in a great degree 
monopolized by the skill of the American navigators. In Eng- 
land, so impracticable was it, long ago, conceived to be to ascer- 
tain the relative values of the commodities, which passed through 
the custom-house, that in the official lists, the prices of 1696, with 
a single exception, are preserved unaltered to the present day, and 
it is only within a few years, that tables of the declared values 
have been also published, as approximations to the true results. 



13 

As a consequence of the system, which we are now examining, 
even internal trade, which the restrictionists of the present day 
have absurdly attempted to oppose to foreign commerce, as if they 
were not branches of the same pursuit, was deemed altogether 
profitless to the state. 

" All the exchanges which are made in a country," said the 
mercantilists, " all the sales, all the purchases which the English 
for example contract among themselves do not augment, by one 
soil, the specie of England. Consequently all the profits which 
are made by internal trade or industry are illusory. Individuals, 
indeed, are enriched but at the expense of others who are ruined ; 
what one gains another has lost, and the nation possessing, after 
all these transactions, precisely the same number of crowns as 
before, is neither richer nor poorer, whatever may have been 
the industry of some, the idleness or prodigality of others."* 

As Europe possessed scarcely any other commodities in request 
among the inhabitants of Asia, the East India trade could not 
be carried on without the exportation of gold and silver. It did 
not at first occur to those, who supported this trade, nor to the 
merchants, who required the precious metals as articles of foreign 
commerce, to question the principle, that the wealth of a country 
was to be estimated by its gold and silver. Munn, Child, and others 
admitting that it was the object of economical regulations, to 
obtain a favorable balance of trade, contended that this was not 
always best effected by a direct operation. The India business, 
they said, was advantageous by reason of the greater amount of 
gold and silver received fiom other countries, in return for the 
productions of the east re-exported to them. 

Some enlightened merchants were, however, subsequently led 
to maintain that the precious metals were commodities partaking 
of the same nature with ordinary merchandize. By their represen- 
tations, the laws against the exportation of foreign bullion were 
repealed in 1663 ; but the prohibitory enactments in relation to Bri- 

* Nouvpaux Principes d' Econ. Polit. par Pismondi, torn. 1. page 34. 



14 

tish coin were continued in force till 1819. By the early English 
writers on commerce much acute discernment is manifested, but 
they are too frequently carried away by the preconceived opinions, 
wliich were then regarded as indisputable. Hence their worlcs exhi- 
bit, in general, glimmerings of light from amidst cloudsof darkness. 
This remark, however, does not apply to the " Discourses on 
Trade" by Sir Dudley North, published towards the close of the 
17th century. His general views would do honor to an Adam 
Smith or a Ricardo. Among the extracts given from his intro- 
duction by Mr. McCuUocb,* we find the following propositions viz : 

" That the world as to trade is but one nation or people, and 
therein nations are as persons. 

" That there can be no trade unprofitable to the public ; for if 
any prove so, men leave it off; and whenever the traders thrive, 
the public, of which they are a part, thrive also. 

" That all favor to one trade or interest is an abuse, and cuts so 
much of profit fiom tlie pul)lic." 

It would be premature to discuss, at this time, the peculiar pro- 
perties, which belong to the precious metals as the standards of 
value, and the ordinary instruments of interchange, but it may 
be well to refer all those theorists, who attach a paramount impor- 
tance to gold and silver, or confound the precious metals with 
wealth, to the reports of the Secretary of the Treasury on the 
commerce and navigation of the United States. They may 
there, without difficulty, trace the natural coinse of the bullion 
trade. Receiving annually a supply of gold and silver, varying 
irom five to eight millions of dollars, in return for the foreign and 
domestic conunodities exported to the mining regions and the 
neighboring islands, the United States have, until within a short 
time, shipped the largest portion of it to China and other parts of 
Asia. From these countries, they haveobtained their pccuhar pro- 
ducts to be consumed at home, distributed throughout continental 
Europe, or employed in effecting exchanges with Mexico and 

* McCuUoch's Political Economy p. 40, 41. 



15 

Schith America for new supplies of the metals with which to re- 
commence the circuitous traffic. 

The following paragraph, which I chanced to meet with in the 
history of the Italian Republics, appears to me so apposite to the 
point now under consideration that I cannot refrain from here 
citing it. 

" In the commerce carried on in the 10th century," says 
Sismondi. " between the Venitians and the other people of 
Italy, the former ftirnished all the manufactured commodities, 
and all the articles of luxury and received in return only the raw 
materials or the precious metals. The balance of trade, accord- 
ing to the system of those who now pretend to cherish commerce 
by loading it with restrictions, was consequently in favor of the 
Venitians, and always agauist the Lombards. But the trade of 
the latter was absolutely free, and such was the influence of liber- 
ty, such were for the Lombards the advantages of this pretended 
unfavorable balance, that in less than a century they accumulated 
capitals and rivalled the industry of their correspondents ; their 
cities were filled with workshops and manufactories, and the most 
prosperous commerce triumphing over the disadvantages of an 
inland situation, animated all the transactions of trade."* 

The commercial history of the United States is similar. 
Whilst the balance of trade was almost always against them, 
they were maidng the most rapid advances in wealth and general 
prosperity ; though we sometimes hear those, who have acquired 
large fortunes, by sending specie to Canton and Calcutta, in ex- 
change for the teas and muslins of Asia, exclaim against the 
ruinous character of a commerce by which they and their coun- 
try have been enriched. ■ 

When other arguments fail, the practice of nations is adduced 
to support the mercantile theory. In the reflections on the mo- 
tives, by which legislators are usually influenced, I have already 
shown why their acts should be received as doubtfid authority. 

^Republ. Ital. torn. I p. JB5. 



16 

But it may well happen, that countries having bad economical 
laws, like individuals subjected to the treatment of ignorant phy- 
sicians, may yet possess in the body politic sufficient of the vis 
medicatrix, not only to counteract their paralizing tendency, but 
to improve in health and strength. If Great Britain, owing to 
the comparative security of property and the perfect protection of 
private rights, was able, notwithstanding her heavy taxation and 
the restrictions on the freedom of her industry, to make advances 
in the sciences, and in the diffusion of the comforts and enjoy- 
ments of life, to an extent, which surpasses all that liad been 
previously attempted in ancient or modern times, who can say, 
what would have been the result, had these obstacles to the accu- 
mulation of capital never existed ! 

Nor is the example of a people increasing in prosperity through 
an unfettered commerce, altogether a hypothetical case. Not to 
revert to the Italian republics, Holland wiien she received from 
abroad most of the manufactured and agiicultural commodities, 
for which she had occasion, was the richest country in Europe in 
proportion to the extent of her territory, while the artizans of Ge- 
neva, without even a custom-house to impede the entrance of mer- 
chandize from foreign states, are enabled not only to defy all foreign 
competition, but to diffuse the most delicate commodities through- 
out the Avhole habitable globe. 

Again, nothing is more usual than to hear it asserted that free 
TRADE is impracticable, unless all nations will simultaneously agree 
to adopt its principles. As in every state of society at all advan- 
ced, there is no direct barter, but buying and selUng are distinct 
transactions, I cannot well perceive, why it is more important, 
that we should sell our products to the same nation, from which 
we buy our foreign articles, than that a tailor should decline pur- 
chasing shoes from a shoemaker, unless the latter would agree to 
take coats from him in payment. As we can never buy without 
having something to give in exchange, which will be accepted as 
an equivalent, it is sufficiently evident that the refusal of one na- 
tion to receive the commodities of another, must either lead to 



17 

the suspension of all intercourse between them, or to the eetablish- 
luent of a circuitous trade analogous to the transactions, which 
take place in the interior of every country, where the business of 
commerce is distributed among the various classes of dealers. 
But as I know that more weight is commonly attached to the con- 
clusions of those, who have been practically conversant with 
the matters, of which they treat, than to opinions formed in the 
closet, I will read a sentence from the petition, presented in 1820, 
by the merdiants of London to the parliament of Great Britain. 
After stating that if one class of producers is protected, every 
other is ecinally entitled to the same legislative favor — a course, 
which, if adopted, would counteract itself, so far as respects the 
benefits intended to be conferred ; and showing that the same 
argiunent, which would exclude or trammel foreign trade, " might 
be brought forward to justify the re-enactment of restrictions upon 
the interchange of productions (unconnected with the public reve- 
nue) among the Idngdoms composing the union, or among the 
counties of the same kingdom," the memorialists proceed to say, 
" That although as a matter of mere diplomacy, it may some- 
times answer to hold out the removal of particular prohibitions, 
or high duties, as depending upon corresponding concessions by 
other states in our favor, it does not follow, that we should main- 
tain our restrictions, in cases where the desired concessions on 
their part cannot be obtained. Our restrictions would not be th^ 
less prejudicial to our own capital and industry, because other 
governments persisted in preserving impolitic regulations." 

As it is not unfrequently urged in defence of the high duties, 
imposed here on the manufactures of England, that they are re- 
taliatory of the corn laws of that country, it may be well to state 
one fact, which will serve to remove that plausible argument against 
salutary reform. A reference to the tables of Mr. Jacob, who 
made, as is well known, a thorough examination into the pri- 
ces of wheat in the different ports of the commercial world, \vill 
fully shew that, in the event of a free trade or permanently low 
duties being adopted by England, no portion of her foreign supply 



18 

of corn would, until a great change took place in the situation of 
the world, be received from the United States. But as the scale of 
duties in the act of 182S, which falls as prices rise, only practically 
admits of an importation in seasons of scarcity, no large surplus is 
raised in Poland, Denmark, and the other corn growing coun- 
tries of Europe to provide for a remote contingency. "We, there- 
fore, have by the existing arrangements opportunities of occa- 
sionally contributing to the necessities of the English market, 
which we should not enjoy under other circumstances. So that 
injurious as are the corn laws to Great Britain herself, and to the 
wealth of the world, they are to us rather beneficial than otherwise. 

But amidst aU the evils resulting from the mercantile theory, 
and as an incidental compensation for some of the mischief, 
which it has effected, we may perhaps ascribe to it the discovery 
of our continent, an event, which has totally changed the condi- 
tion of the civilized world. However much the great navigator 
himself might have been actuated by a lofty ambition, it was 
hteraUy the awi sacra fames, it was the magical power attach- 
ed to the precious metals, which led the sovereigns of Arragon 
and Castile to sanction his cnterprize, and induced the mariners 
who accompanied Columbus, to incur the then unprecedented 
perils of an Atlantic voyage. The motives, which subsequently 
actuated the Plymouth pilgrims, had at that time no existence, nor 
would the rich crops of the tropics, or the extensive regions of 
fertile land, with which the more temperate chmes of our conti- 
nent abound, have had much influence on the adventurers of the 
15th century. 

In Italy several distinct branches of Pohtical Economy were 
early investigated with great sldll ; and for that classic land even 
the honor of laying the foundation of the science has Iicen assert- 
ed.* But to compare the respective claims to originality, of the 

* The works of the Italia,n Economists have been collected and published 
in fifty volumes, under the title of Scntluri Classici IlaUani di Economia I'oli- 
iica. A copy of it is to be found in the lihrary of Columbia College. 



19 

early economists of different countries, would lead to discvssions 
unsuited to the present undertaking. 

By the cultivation of ethics and natural law, much was 
done to prepare the way for the science of Political Economy. 
Dugald Stewart, indeed, says, that we are indebted for its intro- 
duction to the school of which Grotius and Puflendorf are still 
the most distinguished ornaments. 

Montesquieu's " Spirit of laws," which was published in 1748, 
continues to hold a high rank among the books on Pohtical Plii- 
losophy ; but, though looking to the period at which it appeared, 
and the country in which it was written, the friends of liberal 
and enlightened doctrines have every reason to be grateful for 
the manner in which the talents of the author were employed, 
the economist cannot pronounce on his work an indiscriminate 
eulogy. 

To M. de Gournay, an eminent merchant, called to the office 
of Intendant of Commerce, in 1751, Turgot ascribes the origin of 
Political Economy in France. 

Assummg as the fundamental principle of his system, that in 
a free commerce, the interest of individuals and of the commu- 
nity must always coincide, M. de Gournay concluded, " that the 
sole duties of government with regard to commerce, are fiufst, to 
render to all branches of industry that precious hberty, of which 
the prejudices of barbarous times, the proneness of governments 
to lend themselves to the gratification of individual interests, and 
the pursuit of a mistaken good had deprived them ; secondly, to 
facilitate the exercise of industry and ingenuity to every mem- 
ber of the community, in order thereby to excite the greatest 
competition among sellers, which is the sm-est means of securing 
to the purchasers the greatest perfection and cheapness in the 
commodities sold ; thirdly, to admit the greatest competition 
among buyers, by opening to the seller every possible market — 
the sole means of encouraging reproduction, which hence derives 
its only reward ; and m the fourth place, to remove every ob- 



20 

Steele, by which the progress of industry is retarded, by depriving 
it of its natural reward."* 

Among those whom the investigations of Gournay induced to 
speculate on the sources of national wealth, and contemporary 
with him was Francis Quesnay, physician to Louis 15th, who 
became the leader of a philosophical sect, which embraced the 
first talents of his own and the subsequent age. The economists 
did not confine themselves to inquiries into the nature of wealth. 
Their services were of the most beneficial character, and to them 
we are indebted for many sound and liberal views of the" social 
system. The distinctive errors of this school of Political Econo- 
my may in no small degree be accounted for, by their failing to 
arrive at the true theory of rent. They conceived tliat as agri- 
cultural industry alone gave a return to those, who were neither 
capitalists nor laborers, it was exclusively productive of wealth, 
and as a consequence deduced from their theory, they contended 
that all taxes, however imposed originally, must ultimately fall on 
the land. 

" The source of riches, the economists said, is not in commerce, 
because it limits all its operations to conveying from one place to 
another the products of the soil or of industry ; it is not in the me- 
chanic arts, because they only give form to the productions of the 
earth, without any addition to their quantity, and the products of 
these arts have no other value than that of the productions of the 
earth employed or consumed by them. The earth alone is the 
true source of riches, because it reproduces a greater quantity than 
has been consumed to eU'ect the reproduction. Tliis excess of 
reproduction, this produit net is the sole fund, which really in- 
creases the riches of the nation. As a necessary consequence, 
agricultural labor is alone productive ; all other kinds are sterile 
or unproductive. The excess of production, being a gratuitous 
favor of the earth, ought to belong to the proprietors of the land ; 
they alone can dispense it to the other classes of society, and this 

* CEtivres de Tiirgot, torn. 3. p. 345. 



21 

distribution gives to tiiem the character of payers of wages, and to 
those who obtain it the character of receivers of wages. As an 
inference from his principle, the proprietors of land — those who 
pay the wages, ought alone to participate in the government. Fi- 
nally, the net produce being the only disposable riches, the public 
revenue must be composed of a part of this produce and all public 
contributions should be founded on a suigle impost levied on the 
produce of the land."* 

Esteeming money only as an instrument of circulation, the 
economists maintained, that the public good required, that no ob- 
stacle should be interposed to the cultivation of such branches of 
industry as each individual might prefer — that without entire 
freedom of occupation, no department of human labor could 
prosper. This liberality, contrasted as it was with the restrictive 
principles of the mercantile theory, gained many converts among 
enlightened men. As Colbert, imder Louis 14th, had depressed 
agriculture by the preference given to commerce and manufac- 
tures, Turgot, the minister of Louis 16th, zealously embraced the 
agricultural system, and though his basis was in some respects 
erroneous, a clear mind applied to the investigation of practical 
questions, led him to the adoption of many beneficial changes in 
the public regulations. Improved as the science now is, the 
works of Turgot, especially his " Essay on the formation and dis- 
tribution of riches," are still worthy of a carefid perusal. 

Having spoken of Turgot it is proper also to allude to one of 
his contemporaries, whom, if he were less worthy of consideration 
on his own account, the space which he fills in the eventful his- 
tory of Louis 16th, and the relation in which he stood to the most 
eloquent of women, would preserve from obhvion. Necker, 
like Gournay, had employed his early years in commerce, 
and was, as well as the individual referred to, raised by his re- 
putation for practical talents to the most honorable public sta- 
tions. In his writings, he exposed some of the fallacies of the 

* Storcli. Cours d'Econ. Polit, torn. 1. p. 106. 



22 

physiocrats, as the economists were, on account of their leading 
principles, denominated ; but he was not able to anticipate those 
modern discoveries, which have given to the science of Political 
Economy an entirely new character. As his grandson and bio- 
grapher remarks in extenuation of the erroneous views in Neck- 
er's "Treatise on the commerce and legislation of corn," " Mal- 
thus had not then invented that theory of rent, wliich Ricardo 
has developed and Torrens applied to the corn trade."* 

When we consider the old French system of finance, the gifts 
and bribes of all descriptions received by the ministers from the 
subordinate functionaries, supplied as they were by extortions from 
the people, — when we regard the large class of individuals exempt- 
ed by thcii- noble birth from the operations of equal taxation, — when 
we call to mind the small proportion of the contributions levied, 
which ever came into the national treasury, and the monopolies 
and exclusive privileges of every sort conferred on courtiers as 
favors which cost nothing, and at the same time advert to the 
influence, wliich these circumstances had in bringing about the 
downfal of the Bourbons, we shall be inclined to think, that 
Pohtical Economy is no useless study eveia for the absolute 
rulers of nations. 

During the French revolution, the minds of philosophers and 
statesmen were too much occupied by pure politics, by an investi- 
gation of the organic laws of society, and the distribution of the 
powers of government, to afford leisure for the discussion of sub- 
jects whose bearing on the great interests of the country was not 
immediate and direct. 

That many advantages indirectly resulted from Napoleon's 
ambition cannot be doubted. But, however we may approve of 
the abolition of the feudal rights of the petty princes of Germany, 
whatever may be our admii'ation for the splendid routes of the 

* Notice sur M. Necker par M. le Baron de Stael Holstein — CEuvres de 
Necker, torn. 1. p. 19. 



23 

Simplon or Mount Cenis, or for the establishment of an unrival- 
led code of jurisprudence, the Pohtical Economist is compelled to 
admit, that the good arising from the imperial sway was only inci- 
dental, while those regulations, which involved economical consi- 
derations, were founded upon the most unsound principles. On the 
throne, Bonaparte, like Lewis 14th, considered his own glory the 
chief end of a monarch's ambition, and his abstract opinions, 
while in exile, were such as legitimate sovereigns could not have 
failed to approve. 

To prevent speculations adverse to his policy, Bonaparte sup- 
pressed the class of moral science in the Institute. The causes 
however, which had operated during the revolution, and to which 
we have alluded, having ceased to exist and it being no longer 
safe to be occupied about theories of government, some men were 
again found to direct their attention to those truths, which are 
applicable to all ages and countries. Among them may be named 
as best known hi the United States, De Stutt De Tracy and 
J. B. Say, the author of a Treatise, the reputation of which is 
too widely difl'used to require any enconium.* During the period, 
when it was dangerous to speak of civil liberty, M. De Tracy 
prepared and sent for pubhcation, to use his own words, " to the 
man of the two hemispheres, whom he respected the most," our 
illustrious Jefferson, a commentary on Montesquieu, adapted to 
the institutions of our country. In examining the great work 
before him, the reviewer has successfully combatted several 
erroneous principles of Pohtical Economy. In his Ideology, 
De Tracy considers our science at large, and the part of his 
treatise, which relates to it, was translated under the auspices of 
the distinguished individual, to whom we have already referred. 
As to the peculiar views of this writer, I can here only observe 
that, as might be expected from the near connection of La Fay- 

* Four editions of Say's Political Economy, with valuable notes, have 
been published in Pliiladelphia, by Clement C. Biddlc. 



24 

ette and the chosen friend of Jefferson, his principles arc through- 
out of the most liberal character. 

In many matters of a purely internal nature — in the modifica- 
tions of the usury laws, by which only the excess over the legal or 
conventional interest is avoided, the general regulations for the for 
mation of limited partnerships and socieies anonymes, and in the 
abolition of the jnr amies and ma /irises, France has adopted eco- 
nomical improvements, some of which are in advance of England, 
and of most of the states of our Union. Something was also 
done by Louis ISth, and his vmfortunate successor, to extend com- 
merce by the conclusion of treaties, as well with the neighboring 
powers of the continent, as with England and the United States. 
But for most purposes the prohibitory principles have had full ope- 
ration. The continental system of Napoleon had created many 
vested interests, wliicli all the administrations, previous to the last 
revolution, sustained to an extent which left no room for the com- 
plaints of the restrict ionists. Those who were engaged in the 
notable schemes of making sugar out of beet root, and rendering 
fuel scarce by consuming in furnaces for smelting iron ore the 
scanty suppUes of the French forests, were the particular favorites 
of governmeiTt. One of the effects of the protection accorded to 
the domestic manufacture of iron, was that wood was trebled in 
price in Champagne in the course of five years, having risen from 
three to nine francs a cord, from 1S21 to 1826. The prohibitions 
on the products of countries contiguous to the land frontier of 
France, reduced by the events of 1814 from one half of Europe to 
her ancient limits, resulted in consequences, which might have been 
anticipated from the known pohcy of nations. The Netherlands, 
Switzerland, and Germanj^, not only imposed countervailing duties 
of a restrictive nature, but as they wanted, through the measures 
adopted by the French Government, all convenient markets for the 
sale of their produce and manufactures, their sulijccts were incapa- 
ble, amidst this useless sacrifice of wealth, of purchasing the silks 
of Lyons, or the wines of Bordeaux. The distress to which 
numerous classes of merchants, manufacturers, and agriculturists 



25 

were thus subjected by the loss of their best customers, and by 
the diversion of capital to pursuits, that could not be sustained 
without legislative protection, led in 1828, to tlie appointment of 
a commission to revise the entire commercial code of France. 

But the report, which was the result of the labors of this body, 
considers the custoins not only as a tax, but as an instioiraent of 
administration and declares that the amount of their pecu- 
niary produce is a matter of secondary importance. It even 
discusses the means of obtaining a favorable balance of trade. 

From these premises it may readily be supposed that the com- 
mission came to the conclusion that no important change should 
be made in the tariff of duties. It is therefore reserved for the 
ministers of regenerated France to carry into effect those princi- 
ples, which have always been espoused by many influential mem- 
bers of that party in the state, to which the reigning family 
owes its elevation to the throne. 

Our limits will not permit us, in returning to England, to go 
back to Steuart the champion of the mercantile theory, nor to 
point out our obligations to Hume, Berkeley and others, wlio elu- 
cidated several important branches of Political Economy. 

Adam Smith was appointed professor of Logic in the Univer- 
sity of Glasgow in 1751, and in the succeeding year was trans- 
ferred to the chair of Moral Philosophy. When called to the 
latter office, he divided his subject into four parts, in one of which, 
" he examined those political relations, which are founded not on 
the principle of justice., but on that of expediency, and which are 
calculated to increase the riches, the power, and the prosperity of a 
state." The lectures on this branch formed the basis of the " In- 
quiry into the nature and causes of the wealth of nations," and 
were pronounced six years before (iuesnay published his econo- 
mical table. After having spent a considerable time in the dis- 
charge of his collegiate functions, and being able, as we are 
informed by his distinguished biographer,* " to rank some very 

* Dugald Stewart. 
4 



26 

eminent merchants among his proselytes," Dr. Smith went, ui»- 
der peculiarly favorable circumstances, to the continent, where ho 
enjoyed the intimate acquaintance of Turgot, Quesnay, and 
Necker. 

" The Wealth of Nations," was published in 1776, the year 
of our independence ; and thus, by an extraordinary coincidence, 
the principles of commercial freedom were promulgated by the 
Scotch philosopher, at the same time that those of political Uberty 
were announced to the world by the sages of the American Con- 
gress. In opposition to those who make wealth consist exclu- 
sively in gold and silver, as well as to the economists, who re- 
gard the earth as the only source of riches, Smith considers 
labor as the foundation of value. He, however, gave to this 
principle, which has since been shown to be of imiversal applica- 
tion a limited operation, confining it to the period of society, which 
precedes the appropriation of land and the accumulation of capi- 
tal. The importance of a division of labor, in increasing the 
aggregate of production, is traced with a masterly hand, and the 
tendency to equality in the wages and profits of diilerent employ- 
ments is fully explained. Smith shows tliat the best means to 
promote the prosperity of a people is to pursue that course, which 
the self-interest of individuals points out, and notwithstanding hig 
preference for particular branches of industry, he maintains that 
it can never be advisable to influence the removal of capital or 
labor from one pursuit to another, by any extraordinary encourage- 
ments or prohibitions on the part of government. The mercan- 
tile system had favored commerce and manufactures in prefe- 
rence to agriculture, and foreign to the prejudice of the home 
trade, and it is the nature of man, when correcting abuses, to be 
carried from one extreme to another. This may account for 
Smith's considering some branches of industry more beneficial to 
the state than others— a position entirely at variance with the 
great doctrines of his theory, but of which undue advantage has 
sometimes been taken by writers, who have no principle in com- 
mon with the author of " The Wealth of Nations." His strong 



27 

leaning to the opinions of Quesnay. iuid the view which he took 
of rent, as one of tlie constituents of price, led him, also, to re- 
gard agriculture in a particularly favorable light. In the supe- 
riority, which he accords to the home over foreign trade, and to 
the latter over the carrying trade, he neglects the important con- 
sideration, that the quantity of productive industry, which a coun- 
try supports must always be in proportion to its capital. Conse- 
quently, if in the home trade double the amount of domestic 
industry is employed to effect a given result, compared with what 
would be set in motion by the same extent of foreign trade — the 
domestic capital must hkewise be doubled. If, furthermore, the 
returns of capital, engaged in the foreign trade, are received at 
longer intervals, they are, when obtained, proportionally larger. 

But, although subsequent writers have removed some of the 
errors, which the received opinions caused Smith to overlook, and 
have explained other phenomena, for which he failed to account, 
no one can peruse " The Wealth of Nations," without admiring 
its clear expositions of a subject, which, before its appearance, 
could scarcely be said to have had an existence as a science. 

About the close of the last century, Mr. Malthus pubhshed his 
first work. The principle that population has a tendency to out- 
strip the means of subsistence was very forcibly illustrated by a 
reference to the existing condition of every portion of the globe. 
The true cause of rent, viz, that it depends on the diminishing 
fertility of land, was pointed out by Dr. James Anderson, of 
Scotland, the author of several agricultural treatises, as early as 
1777 ;* but the effect of the principle on the theory of national 
wealth seems not to have been noticed, till the nearly simultane- 
ous publications, in 1815, of Mr. Malthus and Sir Edward West. 

The merit, however, is not so much due to him, who makes a 
discovery, as to the person who successfully applies it to a practi- 
cal end, and it is Mr. Ricardo, who has shown, that the funda- 
mental propositions of Political Economy are susceptible of the 
accuracy of mathematical demonstration. 

* See Edinburgh Rev. No. 107, p. 01. 



2S 

1 shall not detain you by dilating on the peculiar claims, 
which this profound reasoner and practical man of business has 
on the attention of young gentlemen, about to embark in the 
pursuits, for which most of you are destined. The character of 
Ricardo has been recently pourtrayed in this place by one of the 
classic authors* of our country, and any remarks from me might 
weaken, but could not add to the force of the just eulogium, pro- 
noimced by my honorable associate. 

The developement of Mr. Ricardo's theory wiU occupy us at 
our next meeting. At present it may suffice to observe, that he has 
shown the nature of exchangeable value — the connection lietween 
profits and wages, and pointed out the manner in which they 
are both affected by rent. These principles he has applied to 
taxation, foreign trade, and other subjects of general interest. 
The laws regulating the currency were thoroughly investigated 
by him, and even those statesmen, who have been most inclined 
to deny the inferences from Ricardo's principles in other cases, 
admit the conclusiveness of his reasoning in this branch of Poli- 
tical Economy. 

Mill and McCuUoch have elucidated the doctrines of Ricardo, 
while some of the expositions of Torrens lay just claim to ori- 
ginality. 

I cannot too highly recommend to your notice the recent works 
of Mr. Tooke, a Isanker of London, who shews, in the application 
of the Ricardian theory to commercial revulsions, a power of 
analysis, in which he is not surpassed by his great master. The 
subjects, too, on which he descants — the causes of high and low 
prices, afford the best illustration of the truly practical character 
of this science. 

The Edinburgh and Westminster Reviews contain many 
very able economical essays, some of which are from the pens 
of the individuals already particularly named ; and though 
the Quarterly Review formerly stigmatized " The Wealth of 
Nations" as " a tedious and hard-hearted book," and declared 

* Mr. Vcrplanck. 



29 

Mr. Malthus's reputation to be " disgraceful to the age," it hau 
long since united with its more liberal contemporaries in extoll- 
ing Adam Smith, and now only resists those discoveries of later 
economists, the application of which to practical legislation would 
be adverse to the interests of that aristocracy, whose zealous 
champion it ever has been. 

In several European seminaries of learning. Political Econo- 
my has formed a prominent branch of study. In Paris, Say, 
under the sanction of government, has for many years delivered 
lectures to several hundred students, and if this science be not yet 
the subject of a distinct chair at the Sorbonne, it was at no late pe- 
riod very often incidentally brought to the notice of the ingenuous 
youth, who were attracted to the University, by the eloquence of 
those unrivalled lecturers, Cousin, Guizot, and ViUemain. The 
Germans, who have left no department of knowledge unexplored, 
have estabhshed professorships in many distinct branches of econo- 
mical science ; but though numerous volumes relating to these 
subjects are to be found at all their fairs, no writer among them 
has, as far as I am aware, duly appreciated or developed the great 
discoveries of the last few years. 

The best continental treatise on Political Economy is the course 
of lectures prepared for the instruction of the Emperor Nicholas 
and the Grand Duke Michael, and originally published at St. 
Petersburg, at the imperial expense. It is not only valuable for 
its sound principles, but it contains much important statistical 
knowledge respecting Russia, as well as a vast collection of facts 
with regard to the moneys of different nations. The views of Mr. 
Storch are expressed with great independence, though he thinks 
it necessary to remark, in his preface, that, " In a country under 
an absolute government, and among a people strongly attached 
to their national habits, a writer is obliged to observe a great 
deal of caution, if he does not wish to injure the cause of reason, 
instead of benefitting it." 

A recent work by Mr. Schalmz, a privy councillor of his Prus- 
sian majesty, and Which is dedicated to the Prince Royal is, as far 



30 

as I can judge from the extracts that have fallen under mj 
observation, like the productions of the French economists — 
the school to which he belongs, decidedly favorable to the princi- 
ples of Free Trade. This treatise is said to have had no little 
influence in inducing Prussia to adhere to that enlightened course 
of commercial policy which she has constantly maintained since 
the last peace, in spite of all provocations to the contrary from the 
neighboring powers, and which contrasts so honorably not only 
with the barbarous systems of Austria and Naples, but with the 
legislation of states, where political freedom is supposed to exist 
in the fullest extent, consistent with personal security. 

Chairs of Political Economy are now established at Oxford and 
Cambridge, the former by the munificence of an individual. Mr. 
McCuUoch iaemployed in inculcating the principles of Ricardo in 
the University of the British metropolis, while, in the rival institu- 
tion of King's College, arrangements have been made for en- 
gaging the services of Mr. Senior, to whose lectures, as pro- 
fessor at Oxford, we arc indebted for a valuable accession to our 
libraries of Political Economy. The place of Mr. Senior at the 
ancient seat of learning was supplied by Dr. Whateley, well 
known as one of the acutest minds of the age, and who has been 
raised by the present enlightened and liberal ministry to one of the 
highest dignities in the church.* 

Associations have also been formed in many parts of England 
for the discussion of economical questions, and during my resi- 
dence in that country, there were two clubs for this object, the 
monthly meetings of which were frequented not only by the Mills, 
the McCullochs, the Malthuses, and other professed votaries of 
Political Economy, but by many distinguished members of parlia- 
ment, as well as by the great bankers and merchants of London. 

Among those, who had particularly distinguished themselves in 
these societies was a young man, — a partner of a commercial 

* Archbishoprir of Dublin. 



house, uhio, about the period of my arrival iu England, was re- 
turned f jr the first time as a member for Dover. 

I chanced to be in the house of Commons on the evening of 
the seventh of May, 1827, when the treaties with the northern 
powers, by which terms of reciprocity as to navigation had been 
established, were assailed with the greatest virulence. On the 
mover of the resolutions, (who was no other person than Mr. Hus- 
kisson's colleague from Liverpool, General Gascoigne,) resuming 
his seat, he was repUed to by a member apparently a stranger to 
most of those who heard him ; but whose acquaintance w^ith facts, 
and knowledge of the principles by which they w^ere to be tested, 
left the minister little to do, in order to consummate a victory. On 
visiting the following day the foreign office, and alluding to the 
discussions to which I had Ustened, I was assured, that so unex- 
pected to Mr. Huskisson w'as the succor which he had received, 
that, before complimenting the honorable member for Dover for 
" the extraordinary degree of knowledge and acuteness," which 
he had manifested, he was obliged to inquire from persons near 
him the name of the place, which his new friend represented. 
Yet, in less than four years from the delivery of his maiden 
speech, was this young merchant called to fill in the ministry of 
England the seat which had been occupied, and at no remote 
period, by a Huskisson, and a Grant. 

I have made an allusion to Mr. Poulett Thomson,* for the 
double purpose of adding another bright name to the list of 
practical merchants, who, while engaged in the acquisition of 
wealth, have not deemed an examination of the principles, by 
which their operations are regulated, unworthy of serious atten- 
tion, and of repudiating a charge, which would call in question 
the sincerity of the English advocates of free trade. 

Looking to the superiority of the English in many branches of 
manufactures, where of course protecting duties are unimportant — 



* Right Hon. Cluirles Poulett Thomson, Vice President of the Board of 
Trade, and Treasiiierof the Navy. 



32 

the proper caution observed iu interfering with vested interests, 
and the permanent motives, which the landlords, — a class pos- 
sessing preponderating influence with the legislature, have to keep 
up rents by preventing the introduction of foreign corn, it has 
often been supposed, that the changes made in the commercial 
code by the consolidated statutes of 1825, were rather specious 
than real. But, assuredly, in the reciprocity acts of 1823-4, 
in the prospective reduction of the duties on silks, in the manu- 
facture of which England has no natural advantage, in the altera- 
tion from prohibition to a protecting duty in the case of bread 
stuffs, in the repeal of the combination laws and statutes as to ap- 
prentices, enough was done to prove that the assent of ministers 
to liberal doctrines was not merely nominal. Lord Liverpool, while 
admitting most fully in 1S20, the advantages of free trade, ob- 
jected to its immediate introduction, by the fact that England 
"had grown up under, though in spite of^'' to borrow his language, 
" a system of restrictions from which it was impossible hastily to 
depart. In the actual condition of our affairs," he added, " with 
our present load of debt and taxes, an immediate recurrence to 
first principles would unsettle the value of all property. Our laws 
with respect to agricultural produce alone throw an insurmounta- 
ble obstacle at present in the way of complete freedom of trade." 

It is only just to observe, that in England, so far from duties be- 
ing levied on foreign imports, to an extent beyond what is required 
by the wants of the Treasury, the receipts fi-om the customs do 
not exceed one-third of the revenue of government, and are 
even less in amount than those derived fi:om the excise. 

Canning and Huskisson never pretended that their patriotism 
was lost in a imiversal philanthropy, and in the course pursued 
by them in relation to the colonial intercourse, the United States 
had just ground of complaint. They were however sulRciently en- 
hghtened to perceive that, by emancipating commerce from many 
of its shackles, they were adopting the surest means of furthering 
the interests of their own country, and the motives, which actua- 
ted their conduct, constitute no argument for disregarding the 
testimony, which their measures bear in behalf of Fi ce Tiaile. 



33 

DerJTing their laws and institutions from England, it was 
natural that the opinions of our ancestors should, in general, 
coincide with those of the mother country, and before the revolu- 
tion there was little room for investigations, the result of which 
our dependent situation would in most cases, have prevented 
our applying to practical legislation. Though the barbarous 
laws of Spain, which made it a capital offence for her colonists to 
carry on trade with foreigners, coidd not, to their full extent, find 
a place in a British code, yet England maintained towards this 
country the strictest monopoly. Many articles of our produce could 
be sent to the parent state alone, the rest could be exported only to 
those countries, which lie south of Cape Finnisterre, and no ship- 
ping but that of Great Britain or the plantations could be em- 
ployed. In several cases, the manufactures of the colonies could 
not be sent from one provinc3 to another, and England assumed 
to herself the right of supplying all goods, which might be wanted 
from Euro[)e. 

Though it was the interference of the mother country in in- 
ternal taxation, which led to our revolutionary struggle, and 
though the right to regidate foreign trade was conceded to her, 
the disadvantages, under w liich the commercial restrictions placed 
America, could not have failed to arrest the attention of the 
founders of our independence. 

The titles of several tracts, in which particular grievances are 
discussed with great ability, will be found collected in a note to 
Professor McVickar's edition of McCuUoch's Political Economy.* 
Franklin, a philosopher, scarcely less acute in moral than in 
physical science, clearly pointed out the injurious tendency of co- 
lonial regulations. He showed that though they are in the nature 
of secondary taxes, they are equally burthensome with the most 
direct cotitributious. The aphorisms of the American sage con- 
tain, indeed, a refutation of the mercantile theory, which may well 

* Outlines of Political Economy, p. 44. 

5 



31 

be recommended to the notice of those, who would be deterred 
from examining the abstruse speculations of a Ricardo. 

The nature of our institutions and the demand, whicli has 
prevailed for intellectual, as well as other labor in the ordinary 
pursuits of life, has, since the revolution, hardly afforded an 
opportunity for the existence of a class exclusively devoted to 
scientific investigations. We accordingly find, that what has 
been written in relation to such subjects, has in general been 
intended to subserve some temporary purpose. Many eco- 
nomical questions have been debated with great ability in our 
legislative bodies, though we cannot claim for their ordinary dis- 
cussions any peculiar exemption from prevailing errors. Some of 
the reports made by the Treasury to Congress, particularly those, 
which emanated from Hamilton and Gallatin, would do honor to 
the Finance Ministers of any country. To the venerable survivor 
of these illustrious statesmen, whose thorough knowledge of the 
principles of science, as well as intimate acquaintance with every 
branch of the commercial system, not only of this, but of aU 
countries, gives to his opinion an authority, which attaches to that 
of no other individual living, we are indebted for a treatise, hav- 
ing for its object the perpetuation of a sound currency, and the 
avoidance of the manifold evils of an irredeemable paper money. 
In the same able periodical,* in which Mr. Gallatin's article on 
currency first appeared, as well as in the Quarterly Journals, 
published at Bostont and Charleston,! will be found other 
essays, which will honorably compare with the discussion of 
similar topics in the European Reviews ; and as the economical 
views of these two last named publications are decidedly opposed 
to one another, the intelligent reader may obtain from their peru- 
sal the principal arguments, which occur in the examination of 
the practical questions, from time to time, presented to the con- 
sideration of the American pubhc. 

♦ American Quarterly Review. t North American Review. 
% Southern Review. 



35 

We have followed the example of Europe, in according to 
Political Economy a place among academical studies. The re- 
spectable college of our city has made lectures on it a part of its 
regular course, nor has the reverend and learned gentleman, to 
whom the subject is assigned, confined his usefulness to the ordi- 
nary duties of a professorship. Besides publishing several origi- 
nal treatises on important branches of that science, he has made 
accessible to the general reader more than one of the valuable 
articles, which are collected in that storehouse of knowledge — the 
supplement to the Encyclopedia Britannica.* 

The new university also, which proposes a course of instruc- 
tion more extensive than that of our ordinary coUegiate institu- 
tions, has placed the science of Political Economy among the 
studies of primary importance, and has already made provision 
for a course to be delivered this winter by a professor of estab- 
lished reputation. 1 In many of the colleges of the Union a text 
book on Political Economy is used, and at some of them, particu- 
larly at Providence, Piinceton, Charlottesville, Columbia, and the 
ancient Seminary of William and Mary, the students enjoy the 
advantage of lectures from masters of the science. 

By our political system most subjects, other than those con- 
nected with foreign commerce, appertain to the local legislatures. 
The modifications, which the original states have made in the 
laws derived from the mother coimtry, have ordinarily been in 
those branches, which relate to penal jurisprudence, or to the 
establishment of more elficient remedies for the protection of 
existing rights. These laws, and, indeed, all legislative enact- 
ments must have a bearmg on the accumulation of wealth ; but 
in most of the states statutes against usury, and in several of 



* Among the writers who contributed to the suppliment to the Encyclope- 
dia Britannica, which was completed in 1824, were Dugald Stewart, Sir Wal- 
ter Scott, Mr. Jeffrey, Professor Playfair, Mr. Ricardo, Mr. Mill, Mr. McCul- 
loch, and others of equal reputation. 

t Professor Vethake of Princeton. 



36 

them poor laws remain in force. While we were without the 
salutary restraint of a national institution, the most chimerical 
experiments in currency were also made in some parts of the 
union by the emission of irredeemable Bank notes to an incalcu- 
lable extent, and monopolies, in the form of charters of ii corpo- 
rated companies, for all kinds of objects still continue to be given 
to the favorites of the legislatures with no less liberality, than they 
were conferred, in the olden times, by absolute monarchs on their 
courtiers. 

We have had, during the recent inclement weather, an illustra- 
tion of the igfiorance generally prevalent in the community on the 
most ordinary topics, connected with Folitical Economy. The 
most violent invectives have been indulged in against the dealers 
in coal; because they advanced their prices, so as to regulate them 
by the probable increased demand and diminished supply of the 
article. The interest of the inhabitants of the city in general 
and particularly that of the poorer classes imperiously required 
the course which they pursued. By raising the price, greater 
economy of consumption was induced, and every temptation held 
out to the proprietors of fuel at a distance to furnish additional 
quantities, even at an extra charge for transportation. 

In all the early proceedings of the Federal government, reci- 
procity was a favorite principle. The first secretary of state in 
his report on the commercial intercourse of the United States, 
strongly recommends perfect freedom of trade, without regulating 
laws, duties, or prohibitions with all powers, that would adopt that 
rule, while as a means of coercing other nations to pursue the 
same system, he proposed to meet restrictions by countervailing 
regulations. The latter alternative, the wisdom of which must, 
as we have seen, depend on the probability of its efficiency, was 
often resorted to by us, during the wars growing out of the 
French revolution, in retaliation for the hostile acts of the belli- 
gerents. 

In 1815, a proffer was made by act of Congress to all nations 
to do away all discriminating duties on the tonnage of vessels, 



37 

and on the goods imported therein, being the produce or manu- 
facture of the country, to which the vessel belonged. In the 
same year a treaty founded on this act, for which England then 
had no precedeni, except in her relations with Portugal, but 
■which she has since made the foundation of a general system, 
was concluded between the United States and Great Britain. 
Many other conventions of a similar, and some of a still more libe- 
ral character, have subsequently been entered into by our govern- 
ment ; nor are foreign vessels confined to the direct trade between 
their own country and the United States except, as in the case of 
England, in retaliation for a similar provision, in their own navi- 
gation laws. 

The total abrogation of the protecting system, so far as regards 
shipping, unless as a countervaihng regulation, has been noticed ; 
but the revenue acts have always continued to be framed with a 
view to the sustaining of certain interests, both agricultural and 
manufacturing, which it was supposed could not, without the aid 
of high duties, maintain a competition with the rival industry of 
other nations. In consequence of these regulating acts, capital 
which would never voluntarily have sought such investments, has 
been attracted to the privileged employments. By the extin- 
guishment, however, of the national debt, the motive for con- 
tinuing to collect the present amount of revenue is about to 
cease. The grave question is, therefore, now presented to the 
consideration of the Representatives of the people, liow to modify 
the tariff, so as on the one hand to pay due attention to vested 
interests by making all important changes gradual ; while, on 
the other, they relieve consumption from all unnecessary bur- 
dens, and render the diUies and imposts uniform throughout 
the United States, according to the true spirit as well as letter of 
the constitution. 

But— our present business is with Political Economy, with the 
leges legum, with the general rules to which all human laws 
ought to conform, not with particular acts of legislation nor the 



38 

interpretation of written constitutions. The great principles of 
the Ricardian theory, which we hope to be able, in some mea- 
sure, to elucidate are equally applicable to the laws of France, 
the ukases of Russia, the statutes of England, and the acts of 
American Congress. After calling your attention to them, a few 
reflections on the momentous question now before the country 
may aptly find a place, at the close of our ensuing lectui-e. 



LECTURE II. 
THE RICARDIAN THEORY. 



In giving in our last lecture a cursory sketch of the objects 
and history of Political Economy, we were obliged to assume, as 
conceded, some of the fudamental principles of the science. It 
will be our business, this evening, to state the theory of Ricardo, 
by explaining the nature of exchangeable value, including the 
distinctions between it and price, and between the permanent 
and market prices of commodities, — the laws which regulate 
profits and wages, and the causes which determine the existence 
and amount of rent. Though this arrangement will necessarily 
confine me to a mere incidental notice of some of the great prac- 
tical questions, to which Pohtical Economy may be applied, I am 
yet induced to adopt it, as the one most likely to accomplish the 
object in ^iew — the rendering of my portion of this course as use- 
ful as I am capable of making it, to those to whom I am indebted 
for the honor of being associated in a very agreeable task with 
gentlemen, whom any American might be proud to recognize as 
colleagues. The plan proposed will, at least, serve to remove 
from the minds of those, who are disposed to engage in the study 
of Political Economy, those preliminary embarrassmenls, which 
the necessity of acquiring a knowledge of definitions is apt to 
occasion, and will prepare them for the perusal of those elaborate 
treatises, to which I have already taken the liberty to call your 
attention. 

'■ A man is rich or poor"' says Adam Smith " according to the 
degree, in which he can afford to enjoy the necessaries, conve- 



40 

niences, and amusements of human life." Aa however these ne- 
cessaries, conveniences, and amusements are susceptible of all pos- 
sible variations, according to circumstances, no statistical data can 
enable us to estimate the relative riches of two nations. We 
might ascertain the quantity of precious metals possessed by the 
whole population of Illinois, and by an equal number of the in- 
habitants of London, or even the money price of all the commo- 
dities of every sort and kind belonging to them respectively : yet, 
this assuredly would afford us no criterion by which to judge of 
the relative degree in which the people of these remote places, 
commanded the necessaries, conveniences, and amusements of 
human life. 

The utility of particular commodities depends altogether upon 
the attendant circumstances, under which they are possessed. 
The productions of different cHmates and soils are extremely 
various, and it sometimes happens, that those things, whicli are 
generally spontaneously bestowed by nature, can only be obt;iined 
as the result of great exertions. Thus, while some countries are 
plentifully furnished with copious springs of water, in others it ia 
necessary to construct aqueducts and reservoirs at a vast expense. 
What in one part of the world is an object of intense desire is 
elsewhere disregarded. In a northern climate furs are almost 
a necessary part of a man's apparel ; fuel is indispensable. 
Within the tropics these articles would be wiiolly useless. Even 
the food required for the support of the human constitution is far 
from being the same in every portion of the globe. In the same 
community a commodity may be useful or not — may afford com- 
fort or give pleasure to an individual according to circumstances. 
There cannot, then, in the nature of things, be an approximate 
calculation of the absolute utility of commodities, while the rela- 
tive benefits conferred by them, must vary with fortunes, tastes, 
and caprices. 

We may form a conjecture of the riches of a nation, by the 
general condition of a people, but neither moral results, nor the 
utility of commodities are susceptible of being acrurately mea- 
»ured or compared. 



41 

It is however, not of utility, or the moral yalue but of the ex- 
changeable or physical value of commodities that we are to speak ; 
and from the view we are about to take of value, we can incur 
no risk of its being deemed synonymous with riches or wealth. 

It is labor which is the foundation of all value. The air which 
we breathe is essential to animal existence ; yet, as it requires no 
toU to obtain it, — nothing acquired by human industry to be 
given for it, it is destitute of all exchangeable value. Water is 
only valuable in the sense of Political Economy, when it costs 
labor to procure it, and it is then measured not by the degree 
in which it contributes to our support, but by the labor ex- 
pended in obtaining it. Hence every improvement, which facUi- 
tates production reduces the value of commodities, at the same tune 
that it renders them more accessible to the the mass of the com- 
munity. While the comforts and conveniences of hfe were 
almost infinitely multiplied by those great benefactors of man- 
kind, the Whitneys and Fultons, the Arkwiights and Har- 
greaves, the labor required to procure commodities, and conse- 
quently the exchangeable value of them, was, by their inven- 
tions, proportionally diminished. 

The paramount influence of labor in the production of wealth 
was alluded to by Mr. Locke, and more recently by Galiani and 
Turgot, l)Ut it was Adam Smith, who showed it to be the regulator 
of value. " The real'price of any thing," says lie, " what every 
thing really costs to the man, who wants to acquire it, is the toil 
and troulile of acquiring it. What every thing is really worth to 
the man, who has acquired it, and who wants to disjxise of it, or 
exchange it for something else, is the toU and trouble, which it 
can save to himself, and which it can impose ujxin other people. 
What is bought with money or with goods is purchased with 
labor, as much as what we acquire by the the toil of our own 
body. That money or those goods indeed save us the toil. They 
contain the value of a certain quantity of labor, which we ex- 
change for what is supposed at the time to contain the value of 
an equal quantity. Labor was the first price, the original pur- 





42 

chase money, that was paid for all tliingf,. It was not by gold or 
by silver, but by labor that all the wealth of the world was origi- 
nally purchased." 

But — we are not to confound the labor realized in a commo- 
dity with that which it will purchase : the former is a constant, 
while the latter is a varialjle quantity. This distinction escaped, 
in the quotation which we have just made, the observation of 
Smith, who considers the value of any commodity to its possessor 
to be " equal to the rjuantity of labor which it enables him to 
purchase or command." The jx)int is however fully elucidated 
by Mr. Ricardo. " In the same country," says he, " double the 
quantity of labor may be required to produce a given quantity of 
food and necessaries at one time, that may be required at another 
time ; yet the laborer's reward may possibly be very httle dimi- 
nished. If the laborer's wages at the former period were a certain 
quantity of food and necessaries, he probably could not have sub- 
sisted, if that quantity had been reduced. Food and necessaries 
in this case will have risen one hundred per cent., if estimated by 
the quantity of labor necessary for their production, while they 
will scarcely have increased in value, if measured by the quantity 
of labor for which they will exchange." Hence while the labor 
realized in a commodity is under ordinary circumstances an in- 
variable standard, the power of a commodity to command labor is 
no certain criterion of its value. 

As the quantity of labor, reahzed in commodities, regulates 
their exchangeable value, every increase of the cjuantity of labor 
exercised on any commodity must augment its value, and every 
diminution must lower it. 

That the amount of labor bestowed on two articles establishes 
the terms on which they must permanently exchange for one an- 
other, will readily appear by a recurrence to the earliest stages of 
society. If we suppose the labor of one day necessary for a fisher- 
man to procure a fish, and of two days for a hunter to obtain a 
deer, is it not evident, on the supposition, that the labor of both 



43 

was equally arduous, that the same degree of skill was requir- 
ed, that both were in an equally good situation to carry on 
either employment, or to make an arrangement for a transfer of 
their connnodities, no exchange could take place, vmless the 
fisherman would consent to give two fish for the deer of the hun- 
ter ? That a bargain might, in fact, be made on other terms, in 
no wise aflFects the principle of interchange. Circumstances pe- 
culiar to the position of the individuals may induce the one or the 
other to contract on terms comparatively disadvantageous. Au 
exception cannot alter a general rule, but it would be absurd to 
supiMse, that a man would work two days to procure indii'ectly 
what another had gained in one, and which it was fully compe- 
tent for him to obtain in the same time. Thus in ordinary cases, 
the labor worked up in one commodity is an unerring ciiterion of 
of the terms, on which it will exchange for another. 

Nor is there any distinction between the principles on which 
the value of material and immaterial products are regulated. 
The services of a domestic are not realized in any tangible com- 
modity, but they are not on that account less valuable than those 
of the carpenter or mason : the same remark will apply to 
the opinions of professional men. They are all the products of 
labor. 

The principle of exchangeable value is not affected by the in- 
troduction of a commodity, wliich serves as a general instrimient 
of interchange. The precious metals are themselves the results 
of labor, and the price of an article, that is to say, the sum at 
which it is estimated in money, is regulated by the amount of 
labor, reahzed in it, compared with the quantity realized in the 
gold and silver for wliich it exchanges. When also paper money 
is introduced, as a substitute for a more expensive currency, its 
value is determined by that of the specie, which it represents. It 
is either the same, greater or less than that of the metals, whose 
place it assumes, according as its quantity is the same, less or 
gieater than that of the coin, which would otherwise circulate. A 



44 

simple illustration will suffice to establish this proposition, which 
is of primaiy importance in that branch of Political Economy, 
which relates to money. If we suppose the currency of a coun- 
try to consist of seventy-three and a half millions of dollars in 
silver, (which is, by the by, the present actual circulation of the 
United States, in bank notes and bank drafts and coin,) and the 
whole of this specie to l^c withdrawn, and the same precise amount 
in paper to be substituted, it is evident as each paper dollar would 
measure the same amount of commodities as the silver one did 
before, that the prices of all articles would continue^unchanged ; 
while, if the paper currency exceeded the metallic, they would 
rise in proportion to the augmentation, and if it was less they would 
fall in a degree commensurate with the contraction. 

The general proposition respecting the exchangeable value of 
commodities adiiiits of a qualification. It is true in all cases, where 
they can be increased in quantity by the application of labor ; 
but the supply of rare statues and pictures, of wine made of 
grapes growing in vineyards of peculiar soil and limited extent, 
cannot be augmented Ijy human exertion, and of course these 
commodities, as well as such as are the results of monopoly, de- 
rive their value from their scarcity, and form exceptions to the 
ordinary rule. Where there is a limited quantity of articles 
not susceptible of increase, the original cost may be wholly disre- 
garded, and no ounds can be ascribed to the price, which the 
taste or caprice of individuals may induce them to give in'order 
to obtain them. 

Dr. Smith, as we have heretofore observed, confines the princi- 
ple, that labor is the basis of value to the period of society, which 
precedes the accumulation of capital and the appropriation of 
land. The proposition is however susceptible of universal appli- 
tion. Capital is the product of labor, which has been hoarded 
and accumulated, and thus preserved from immediate consump- 
tion. When employed in the [production of a commodity, it 
enters into exchangeable value in like manner as simple lajjor does. 
To recur to the case of the hunter and fisherman.— The hunter, 



45 

instead of directing his exertions immediately to the chase, may 
devote the labor of one day to the construction of a bow and 
arrow; and that of another to pursuing the game. Supposing the 
fisherman, as before, to procure a single fish in one day, the terms 
of barter will not be altered ; but while in the former case the ex- 
changeable value of both consisted exclusively of simple labor, in 
the latter the fish is the product of simple labor, and the deer of labor 
and capital combined. Should the bow and arrow aid in the 
taking of two deer, the direct labor in both cases contiiuiing un- 
changed, only one half of the capital or hoarded labor would be re- 
alized in a single deer, and of course, as the result of the variations 
in the amount of labor requued to ol)tain them, the exchangeable 
value of deer and fish would be altered. The bow and arrow, in 
their nature, do not differ from the complex machinery of the most 
advanced state of society ; and thus we see, that the rule which 
determines that articles are to one another, as the labor realized 
in them respectively, is in no wise affected by the substitution of 
capital for labor. 

The first capital, which was formed, was thp result of pure 
labor, that which was subsequently created of capital and labor 
united ; but in the value of an article is included all the labor, 
whether direct or accumulated, which was requii-ed to furnish the 
finished commodity at the place, where it is estimated. 

Most things come to the consumer after having passed 
through the hands of the agi'iculturists, manufacturers, and mer- 
chants, and their cost, when purchased for use, is made up of the 
labor direct and accumulated bestowed on them in their various 
stages of production. 

Suppose a piece of Hnen of American produce and manufacture 
to be pmchased in one of our city shops. 1. The raw material 
must be obtained from the agriculturist who, to say nothing 
of the indestructible properties of the soil, of which we shall 
by and by speak, must employ some capital in the buildings 
and other improvements and must possess cattle and horses, 
and instruments of tillage. Besides the expenditure which 
these objects imply, he must use a certain sum, in the pajrment 



46 

of wages, including what is due to him for his own superinten- 
dence. 2. The flax must be taken to the manufacturer who em- 
ploys fixed capital in his mills, &c., and circulating for the com- 
pensation of the workmen. 3. The merchant, who is interposed 
between the manufacturer and the consumer, must come in for 
his profits on his advances, and for the labor, which he devotes to 
his business. To simpUfy the case, only three of the processes, 
through which all commodities must pass, have been pointed out, 
but it ordinarily happens, that there are many more. Thus the 
flax, instead of being sent by the farmer to the manufacturer, is 
sold to the country dealer, and the manufactured article is dispos- 
ed of to the wholesale merchant, who distributes it to his retail 
customers. 

The division of labor among individuals is the result of 
an augmented population. In a new country single famihes are 
obliged to perform among themselves all the various employments 
required to supply food and subsistence. In a more advanced 
society, not only is there a division of the people into agriculturists, 
merchants, and manufacturers, but in cities we find branches of 
business distributed among several classes, which in a village are 
carried on by the same individual. 

The tendency of a division of labor to increase production, by 
the greater facilities, which constant habit in one employment 
naturally creates, has been forcibly pointed out by Dr. Smith, 
who compares the number of pins, which can be made by isolated 
individuals, where each manufactures a whole one, and the 
number produced, when the several parts are distributed among 
various workmen. As the example given in the " Wealth of 
Nations " is no doubt familiar to most of you, I will not trouble 
you with a repetition of it on the present occasion. Modern 
improvements would fiunish us with still stronger illustrations. 

Commerce or foreign trade may be regarded in the light of a 
territorial division of labor. By it the industry of every country 
may be directed to those pursuits, for which it possesses the 
greatest relative advantages, and thus production be infinitely 



47 

augmented to the universal advantage of mankind. Every 
region lias certain productions especially congenial to it. By 
artificial exertions it is true, many of these might be raised 
elsewhere, for there are few impediments, which human industry 
wiU not overcome. As sugar is manufactured in France out of the 
beet root, oranges may be gi"own here in hot-houses, instead of 
being imported from the West Indies. But why apply incalcu- 
lable efforts to procure what might as well be obtained with no ex- 
traordinary exertions? The country, which imports from others the 
manufactures or agricultural productions required for its own con- 
sumption, does not on that account encourage its domestic indus- 
try less than the one which resorts to a " wall of brass," though 
the kind of industry may not in the two cases be precisely the 
same. 

It certainly cannot be material as regaids the employment of 
labor, whether we make use ourselves of the commodities, which 
are grown and manufactmed among us, or exchange them for 
others more suited to our wants, but for the procuring of which at 
home we do not possess equal facilities. In the former case, 
however, we should probably by the same amount of exertion 
procure more of the desired commodities than in the other ; 
and instead of less labor being put in requisition the greater 
amount of accumulation, which woidd take place under a free 
system, would afford to capitahsts constantly increasing oppor- 
tunities of extending the operations of industry. Nor is it any 
argument against foreign trade, that the capital of other nations 
is to a consideraljlc degree employed in it. This will always be 
the case in the transactions between two countries, where the rate 
of profits is unequal, and it is mutually beneficial. It enables 
the people of the country, where capital can be most advanta- 
geously employed, to use their resources at home with greater re- 
turns in other branches of industry; while at the same time 
the foreign capital obtains a higher rate of profit, than could else- 
where be procured for it. 

The principle, to which we have referred, that m the value of 



48 

the commodity, all the previous labor and capital required for its pro- 
duction must be included, will satisfactorily account for many of 
the seeming inequalities in the compensation of labor. An 
ordinary day -laborer retjuires no previous instruction, and his sup- 
port, with what may be necessary for that of infant children, may 
be considered the natural compensation of labor in its simplest state. 
The mechanic must be paid for the acquisition of his trade. The 
professional man, on whom a great deal has been expended, 
must receive a return not only for his direct labor, but for the 
capital, which has Ijeen consumed in placing him in his present 
situation. In order that the wages should be equal in these 
cases to those of the ordinary ploughboy, they should include a 
compensation, calculated on the principle of an annuity for all the 
anterior laljor. both immediate and accumulated, which has been 
exhausted in the acquisition of the requisite knowledge. There 
are, also, other circumstances, which determine the relative rates 
of wages. The intensity of the labor has its influence. Some 
branches of industry are deemed more honorable than others, 
and persons are frequently willing to forego greater pecuniary 
advantages, in order to enjoy a higher distinction in the eyes of 
the community; while many avocations are so extremely (hsa- 
greeable, that more than the usual compensation for the required 
sidll is necessary to obtain a competent supply. Some pursuits 
will almost infallibly yield a certain return for labor ; others again 
are of the character of a lottery, where there arc a few great 
prizes, but a vast number of blanks. 

The security of agriculture, the independent condition of the 
yeomanry, and the little previous knowledge which it demands, 
induce a large class to engage in it, with profits inferior to those 
generally afforded in other pursuits. But even in this branch of 
industry, the returns for labor and cajjital are apparently very 
unequal, the superior skill required, and the greater risk incurred 
in gardening and in the cultivation of vineyards, thougli these 
departments of agriculture yield larger profits, prevent them from 
being really more lucrative than others. The sugar estates of 
the West Indies and Louisana, and the cotton and rice planta- 



49 

lions of Carolina and Georgia aflbrd, in favorable years, a much 
higher rate of profit than the farms of our northern states, but 
the planters of Carolina and Georgia are much more exposed 
than the agriculturists of New- York and Pennsylvania to a total 
failure of crops,' and the climate makes great countervailing 
inducements necessary to a continuous residence. The hazards 
of the merchant exceed those of most other employments. One 
adverse speculation may crush the most zealous and industrious ; 
whereas every expeiiment, every failure only adds to the chances 
of professional success. But the hopes of acquiring a princely 
fortune overbalance the risks of commerce in the opinion of no 
small portion of the enterprizing and ingenuous youth of every 
prosperous country. If due regard be had to the considerations, 
which we have adduced, it will be found, that the difference, 
which exists in the compensation of human labor and capital, is 
apparent not real. Were further proof required to support this 
position, it would be found in the fact, that, as there is nothing to 
prevent any person's applying his industry and resources to the 
pursuits, to which he may be attracted by the highest reward, if 
the gains in one business should exceed those in others, capital 
would necessarily be withdrawn from the less profitable employ- 
ments. Temporary inequalities may indeed exist. For short 
periods, a change in the demands of the market may compel some, 
whose previous habits unfit them for other business, to labor on 
less advantageous terms than their neighbors, and much of 
that capital, wliich is invested in buildings and machinery, 
may not be susceptible of a transfer ; but, there is no proposi- 
tion clearer, than that the profits in diflferent employments 
tend to an equihbrium. However much, therefore, the commu- 
nity may suffer from obstacles to the free developement of indus- 
try, it is erroneous to suppose, that correspondent benefits accrue 
to those engaged in a particular branch of business, unless they 
individually enjoy a monopoly. Though foreign competition be 
excluded, if a business is accessible to all the inhabitants of a 

7 



50 

countiy, it cannot, for a length of time, yield any thing beyond the 
ordinary profits. 

A commodity, as we have seen, may be the result of either di- 
rect or accumulated labor, that is, of labor or capital, or of both 
combined, in the first case, supposing no advances to have been 
made for subsistence by a capitalist, the whole product will belong 
to the laborer; in the second, the capitalist would be the sole 
owner, and in the last it would be divided between them, accoTd- 
ing to certain rules. Tlie portion which goes to the capitalist, 
after replacing his advances, is called profits, and that which be- 
longs to the laborer is termed wages. Of the nature of a commo- 
dity, the product of simple labor, no further illustration can be 
necessary. The additional value, which a cask of wine acquires by 
being kept a year may be considered as an example of a value 
created by capital alone. Supposing the wine to have cost $1000, 
and the rate of profits to be 10 per cent., the wine at the end of the 
year would be worth ,f 1100. Were this not the case, the power 
of the capital invested in the wine would be lost to its owner, but 
if other modes of realizing capital were open, none of it would 
be laid out in investments, which did not j4eld the ordinary ad- 
vances, and consequently wine would never be purchased with a 
view of retaining it to be improved by age. 

If we can suppose a commodity to be wholly produced in the 
space of a year by a machine of the same cost with the cask of 
wine, and calculated to last indefinitely, the value of the commo- 
dity will be equal to, and will measure precisely the new or addi- 
tional value conferred on the wine by withholding it from use for 
the above period. 

To simplify the subject, the parties concerned in production 
have been supposed to consist of two classes ; — the rich men, 
who furnish the materials and instruments of production, and the 
workmen, who supply the labor. But the principle is not varied, 
when the capitalist, instead of making a division of the proceeds of 
the commodities, advances to the laborer his wages, before a sale is 
effected. The whole product will then be his, as fully as the pro- 



51 

diice of a West India plantation Ijelongs to t[ie slave owner; but 
the adjustment of profits and wages is calculated on the same prin- 
ciples, as if the article was first sold, and the distribution made be- 
tween the owners of the direct and accumulated labor. 

Supposing an article produced by their conjoined operation, it 
is for us next to examine in what manner it is apportioned be- 
tween the capitalist and laborer. As the commodity comes into 
the hands of the capitalist, who pays out of the proceeds the la- 
borer's wages, it is evident that the former's share must depend on 
what he gives the laborer, and thus as wages rise, profits must 
fall, and vice versa. This, it is evident, rests on the same 
foundation with the axiom, that the whole is equal, and only 
equal to all its parts. In an old country, for the reasons, which 
the theory of rent furnishes, wages, i. e., proportional wages, 
are high, while in a new one, they are low. Lest, however, this 
should appear paradoxical to those, who are accustomed to hear of 
the low wages of Europe, and the high wages of this country, 
it is proper to explain to you, that it is not wag^^s, computed 
either in money or in commodities, that we are now discussing, 
but the proportion between the returns of capital and labor. — 
From not attending to this distinction, political economists, in 
other respects entitled to consideration, have fallen into unfor- 
tunate errors. It may well happen, that considered with refe- 
rence either to their money price, or to the command which 
they afford over the comforts, conveniences, and necessaries of 
life, profits and wages may both at the same time be very high 
in one place compared with another. This is indeed ordinarily 
the fact in the United States, and in most other countries, which 
have not yet attained a stationary condition ; while among nations 
whose prosperity is declining, the reverse is the case. 

We have already observed, that the wages of the laborers 
were usually advanced by their employers. This capital, as well 
as that expended in the purchase of the raw material, is con- 
stantly reproduced in new commodities, and is termed circulating. 
That which is laid out in buildings, and other permanent invest- 



52 

merits, is distinguished as fixed capitul, and is of evei y possible 
degree of durability. Tiie whole power of one machine may be 
exhausted on a single commodity, while another may be ca- 
pable of making ten thousand all equally calculated for the pro- 
posed end. Utensils or machinery may not only have occupied 
different periods of time to produce them, may have unequal 
quantities of labor realized in them, but they may be calculated 
to last almost indefinitely, or they may approach to the nature of 
circulating capital. An annuity of less than seventy-three cents, 
accumulating at ten per cent, for one hundred years, would re- 
place a capital of $100,000. Therefore, in regarding a machine 
of the durability of one hundred years, we may almost lay out 
of consideration the annual consumption of the fixed capital. As 
however we estimate a commodity by the labor bestowed not only 
on its immediate production, but Ijy that also, which has been ex- 
pended on the various implements required to give effect to the 
particular labor, to which they were applied, the durability of ma- 
chinery, and the number of similar commodities in the production 
of which the same fixed capital is capable of concurring, are mat- 
ters of essential consideration. 

Were all capitals circulating, or of equal durability, no altera- 
tion in the wages of labor would have anj' effect on the relative 
value of commodities ; for as, according to what has been already 
stated, the value of a product is composed of wages, the returns 
of direct labor, and of profits, or the compensation given for the 
use of capital, it necessarily follows, that as one jwrtion is in- 
creased, the other must be diminished. If, in any particular trade, 
wages rise, there is no reason why the capitalist should receive 
less profits, than are obtained in other similar pursuits, hut the 
causes which lead to permanent augmentations in the rate of 
wages, as will hereafter appear, extend to all laborers alike, and 
must produce similar effects on their employers. 

But the capital engaged in the several branches of industry is 
of unequal durability, and the periods of its return are very 



53 

various. These diversities in the nature of capital, and its several 
combinations with direct labor, occasion some complexity in de- 
termining the natural cost of production, and in comparing the 
exchangeable value of commodities. Cases varying betvv'een the 
two extremes of articles, produced wholly by machinery, that is, 
by fixed capital, and such as are entirely the result of direct labor 
may be stated, so as to present all possible combinations of fixed 
and circulating capital. If we suppose two capitals, one of such 
durability, tliat its gradual consumption may be disregarded, and 
the other employed in the payment of wages, if labor becomes 
more valuable, and wages be thereby raised, and profits made to 
fall, it would seem, at the first view, that the owner of machinery 
would be unaffected by the rise of wages, and that its influence 
would be felt wholly by that class, which used its capital for the 
payment of laborers. This result, hovi^ever, competition would pre- 
vent. The equality of profits can only be temporarily disturbed, 
and the effect would ultimately be a diminished value in exchange 
of the manufactured articles, and thus the commodities produced 
by direct labor would rise in value, as compared with those made 
by machinery. 

In the remarks on production we have made no mention of 
the peculiarities, by which the earth as a natural agent is distin- 
guished. In the first settlement of a country, where every one 
may have as much land as he pleases, by the mere act of appro- 
propriation, it is obviously in its nature the same in aU respects, 
as the air or water ; and the returns from agricultural produce, 
like those from other branches of industry, are apportioned 
between profits and wages. In the progress of society, however, 
the demand for additional produce causes land of diminishing 
fertility to be taken into cultivation, and labor is applied to agricul- 
ture with less favorable returns. It is obvious, that if a given 
amount of industry obtains firom one acre twenty bushels of corn, 
whilst another acre with the same toil can be made to yield only 
ten, and that in the last case the produce is an equivalent for the 
capital and labor, according to the ordinary rate of profits and 



54 

wages, there must in the former be a surplus beyond what is re- 
quired by the laborers and capitalists. But we have shown, that 
in the same country, there cannot be unequal profits, and that any 
seeming inequalities are only apparent. If on one farm, wheat is 
raised with half the labor required to produce it on tlfe adjoining 
estate, it can be sold no lower. We cannot suppose two prices, the 
one double the other, at the same time and place, for wheat or corn 
of the same precise quality. But aU commodities, which continue 
to be produced, must afibrd a remunerating price, that is to say, so 
much as will compensate the cost of production. Consequently, the 
price of wheat or corn is regulated by the expense of raising that 
portion of it, which is furnished under the least favorable circum- 
stances ; and if we consider additional capital to be applied to the 
most fertile soils with diminished returns, the result is the same 
as if recourse had been had to inferior land. Rent then, or the 
difference between the produce of any given soil, and that of the 
least fertile in cultivation, which merely compensates capital and 
labor, must belong to a third class. 

Locality has also an effect in determining rent. While the 
neighborhood of a large town, or of a navigable river, makes all the 
land in a district yield rent, an inaccessible situation, the want of 
good roads, or of other communications, may have the same effect 
as inferior fertility. For the supply of a large city, the nearest 
fertile land would be first cultivated ; when this is insufficient, it 
must always be a matter of calculation, whether to resort to the 
next fertile, to apply additional capital to the old with diminished 
returns, or to make up the deficiency from the best lands of more 
distant places. If a remote territory be cultivated for this pur- 
pose, the expense of conveying the produce of the soil is added to 
the cost in other cases, and thus less fertile land near a city may 
be as advantageously employed, as that of the first quality, at a 
distance from a market. 

According to the theory of rent, after recourse has been had to 
secondary soils, we may suppose the products of the earth to be 
distributed among landlords, capitalists, and laborers. It is, how- 



55 

ever, proper to observe that by rent, in the sense in which we are 
now employing it, is meant merely the compensation given for the 
use of the indestructible powers of the soil. The buildings, fences, 
and other improvements are capital, partaking of the same cha- 
racter with the accumulated labor invested in machinery. As to 
the rent of houses, a part is the remuneration for the capital employ- 
ed in buildings, and is governed by the laws, which regulate profits, 
the remainder depends on locality, and, as in cases of monopoly, 
is the highest, " when there happens to be the greatest demand 
for houses, whatever the reason for that demand, whether for trade 
or business, for pleasure and society, or for mere vanity and 
fashion." 

In the United States, the same individual is in most cases both 
landlord and farmer. But though one person shoidd represent 
the three several characters connected with agriculture, so much 
produce as will pay the interest of the difference between the 
price of any given soil and of the least fertile in cultivation, corres- 
ponds with rent — the share of the landlords ; the remainder will 
be apportioned between wages and profits, as before the appropria- 
tion of land. However the different classes may be blended, 
here as elsewhere, " rent consists of the difference, or the value 
of the difference between the produce obtained from the capital 
first applied to the land, and that whicli is last applied to it." 

In consequence of the diminution in the returns from agricul- 
tural industry in the progress of society; which falling off is some- 
times checked, but cannot be permanently arrested by improve- 
ments in tillage, the amoiuit to be distributed to the capitalists and 
laborers is constantly decreasing. When the produce of the last soil 
in cultivation is ten bushels per acre, profits and wages together will 
be only one half of what they were, when no land was cultivated, 
that did not yield twenty bushels. But wages are restrained by 
necessary limits, below which nature will not allow them perma- 
nently to fall. They must be equal to the sustenance of the 
laborer, and of that of his infant children, who are incapable of 
supporting themselves. Consequently, when recourse is had to 



56 

inferior soils, the capitalist principally suffers, profits falling with 
every increase of rent, that is, with every diminution of fertility. 

We have, then, the solution of the problem as to the true cause 
of the dechne of the rate of profits. It is not, as has been often 
erroneously maintained, the augmentation of capital, and the 
competition among those who possess it. Profits do not de- 
pead permanently upon the demand for capital, as compared 
with the 'supply, but on the proportion of the whole produce, 
which goes to the laborer. As long as the means of employment 
exist to a proportionate extent, the indefinite increase of capital 
can never diminish profits. It is the productiveness of industry, 
determined by the fertility of the soil in cultivation, which regu- 
lates their rate. The diminution of gains from agriculture is the 
the effect of a law of nature. The principle of the equality of pro- 
fits, in all employments, shows that there must be a corresponding 
decline in the returns from capital, employed in other branches of 
industry ; and thus.the profits of the manufacturer and merchant, 
as well as those of the farmer, must ultimately be regulated by 
the character of the soil in cultivation. 

In new countries, in addition to the other advantages of great 
fertility and cheapness of subsistence, capital is increased so much 
more rapidly than population, that, in consequence of the insufii- 
ciency of laborers to meet the demand, the wages of those, whose 
business recjuires the least previous knowledge, enables them to 
obtain indulgences, which far exceed their necessary subsistence. 
But, in countries which have passed the stationary condition, 
though capitalists are the ultimate sufferers, the wages do not im- 
mediately accommodate themselves to the actual condition of 
things. There is a constant tendency to prevent the fall of pro- 
fits, by withholding not only that surplus amount of subsistence 
which is demanded for an advancing state of society, but even 
the supply which is necessary under the existing circumstances. 
By exchanging manufactured commodities, which, as we have 
seen, always fall in price as wages rise, for raw produce, the 
effects of diminishing fertility may be long diverted from densely 



57 

populated countries, and the most distant regions made to furnish 
the requisite supphes ; while those nations, which yet possess 
extensive tracts of uncultivated land may procure in exchange, 
by availing themselves of their natural advantages, a far greater 
abundance of manufactured commodities, than any direct applica- 
tion of their resources to such objects could insure. Countries, in the 
condition of the United States and Great Britain, might thus be 
made, by a free interchange of raw and manufactured commodities, 
to assume towards one another the mutually beneficial relations of 
country and town, and the decline of profits in the latter be postponed 
till the banks of the Columbia are cultivated to the same degree, as 
those of the Thames. Indeed we find a corrolsoration of our theory 
in the result of all elTorts to produce an artificial distribution of em- 
ployments. The condition of the Eastern States is approximating 
to that of Europe. The rate of profits, so far as they can be tested 
by the ordinary interest of money, as you all well know, is lower at 
Boston than in New- York, and very much lower here than at Cin- 
cinnati or New-Orleans. In all human probability, in a system of 
perfectly free trade, flourishing manufactories, not dependent on 
the caprice of legislators, would long since have been established 
at the East, as the most advantageous employment of capital. Nor 
has the seat of manufactures been sensibly altered by any Con. 
gressional enactments. The great establishments are now to be 
found, where Political Economy shews that they can alone exist. 
To say nothing of the slave-holding states, the condition of 
which presents a more complex question, if free ingress is 
allowed into Indiana or Illinois, of the products of the manufac- 
tories of Massachusetts, and Rhode-Island, and we do not adopt 
anew the old British regulations, which prevented articles of the 
first necessity from being carried from one colony to another, no 
prohibition of foreign commodities can, for centuries to come, make 
the Western States manufacturing districts. 

Our view of production would be incomplete, did we not notice 
the distinction between the natural and market price of commodi- 
ties. Even in the ciise of those articles, which may be increased 

8 



58 

to any extent, the price in the market seldom coincides, at any 
one time, with tlie cost of production. The latter, however, is the 
point towards which it always tends, and around which it oscil- 
lates ; the market price being sometimes higher and sometimes 
lower than the natural price. 

I know not how I can better explain this subject than by a 
reference to Mr. Simond's work on Switzerland. By the by, this 
gentleman, who was a highly respectable merchant of New- York, 
before he was known in the annals of European letters, may be 
noticed as another example of the entire compatibility of success- 
ful commercial operations with the extensive cultivation of science, 
literature, and the fine arts. " Some dilTerences of opinion," says 
Simond, " have lately taken place respecting the theory of prices ; 
the question at issue seems to be, whether prices are regulated by 
cost of production, or by demand'/ Something analogous to this 
would be the question whether the level of the sea is regulated by 
the winds or by gravitation 1 Like the great law of nature, cost 
of production must be the fundamental regulator of prices, dis- 
turljed, indeed, incessantly within certain limits but never beyond 
them by demand."* 

The mistakes, which sometimes occur in not adapting the pro- 
duction of particular commodities to suit the varjang tastes and 
caprices of the people ; the revolutions in the course of trade, occa- 
sioned by great political changes in the situation of nations ; a har- 
vest in a populous country either unusually productive or extremely 
deficient ; an abundant or scanty crop of the article, from whence 
the raw material of an important manufacture is supplied — all, or 
any of these circumstances will have a material effect on the mar- 
ket price of commodities. In other words, the demand and sup- 
ply, in extraordinary cases, will produce great oscillations from the 
cost of production^the central point, which serves as the regula- 
tor of value. The wars growing out of the French Revolution, 
whether we regard their duration, the immense resources unpro- 

* Voyage en Suisse, torn. I. p. 110, note. 



59 

ductively consumed by them, or the amount of capital and lalx)r 
applied, during their existence, to pursuits dependent on the con- 
tinuance of belligerent operations, may be supposed to have had 
the most iinportant bearing of any events of modern times on the 
economical condition of the world. It can then hardly be considered 
surprising that, on the arrival of peace, production could not at 
once accommodate itself to the altered state of things. In many 
pursuits, more articles were produced than would bring a remune- 
rating price; and, as this inconvenience was not confined to Eng- 
land, or to countries which were obUged to undergo a change in 
their currency, it was seriously contended, that a universal glut was 
not only possible, but that it had actually occurred. I well remem- 
ber when, about ten years since, I visited Evu'ope for the first 
time, that this subject, which long formed a topic for reviews and 
pamphlets, was one of constant discussion among politicians and 
statesmen. In refuting the erroneous proposition then much in 
vogue, Mr. Say, though in general very inferior in method to the 
EngUsh economists, was particularly happy. 

Dr. Smith had shown, how the powers of production might be 
rendered most eflective. Mr. Say completed his doctrines by 
provuig that no conceivable increase of these powers can ever 
occasion a general glut, or universal overloading of the market. 
"Too much of one commodity," says he, "may occasionally be 
produced, but it is quite impossible that there can be too great a 
supply of every species of commodities. For every excess 
there must be a corresponding deficiency. Such commodities as 
are produced in the view of being directly consumed by theii" 
producers, can never be in excess ; and such commodities as are 
canied to market are produced only in the view of obtaining 
others in exchange for them ; and the fact, that any description 
of them is in excess, is of itself an unanswerable proof, that there 
is a corresponding deficiency in the supply of those they were 
intended to exchange for or buy."* 

* Say, Histoire d'Econ. Pol. 



60 

The price of articles, that is, the ordinary exchange of them 
for money, is also influenced by the state of the currency. 
Prices vary not only according to the demand and supply of the 
the commodities bought and sold, but also according to the greater 
or less abimdance of the medium, in which they are estimated. 
The condition of the currency of England during the latter years 
of her war with Napoleon, and of that of the United States, 
during the period, which intervened between the dissolution of 
the old and the establishment of the present National Bank, 
renders unnecessary all further reference to the eflect on prices of 
an irredeemable paper money. Even where there is a metallic 
currency, or one convertililc, at pleasure, into specie, it is not an 
invariable standard. By the greater or less facility of procuring 
the gold and silver from the mines, the rent of which is regulated 
by their fertility, in like manner with that of land, the exchange- 
able value of commodities is permanently altered. Independently 
of this consideration, the price of money, and of com'se of the 
commodities for which it is exchanged, is aflTected by the greater or 
less expansion of the cmrency. When the metals alone arc employ- 
ed, it requires the introduction of a quantity of gold and silver into 
circulation, or its withdrawal, to make money more or less abun- 
dant. When it becomes imusually plentiful, it raises the price of all 
articles, and thus gold and silver being rendered comparatively 
cheap, are exported — till such time, as by their diminution in 
quantity, the demand for them increases, and they can no longer 
be profitably sent out of the country, in preference to other things. 

When the currency is partly paper and partly metallic, any 
depreciation, owing to the increase of the paper, will lead to the 
exportation of gold and silver, though their amoujit in the covmtry 
may not be augmented. And as it is onl}' the coin, which circu- 
lates with the paper, not the precious metals in the banks, serving 
as the basis of their emissions, which has an influence on the 
currency, a great increase may take place in the gold and silver of 
the country without a depreciation of the circulating medium. 
Of this, indeed, we have jiad a practical illustrfition within the 



61 

last two years. According to the Treasury Reports, from 1821 
to 1829, $60,095,000 of specie aod bullion were received into the 
United States, and during that period, |>69,567,000 were exported. 
We know, however, as we have from the returns of the banks 
and other sources the quantity of gold and silver in the country, 
at the two periods in question, that the imports are put down at 
too low a sum. Indeed, as specie pays no duty, the accounts of 
the importation of it are very defective, and an amount was pro- 
bably brought into the country by emigrants, which would make 
up the difterencc between the exports and imports, as given in the 
official statements. But, in 1830, owing to a change in the mode 
of conducting the East India trade, the decline of the practice of 
hoarding specie by the native chiefs, and the extensive use, at 
that particular period, of bills of exchange, though the imports of 
the precious metals were $8,156,000, the exports were only 
$2,178,000. There was also, in addition to the amount exported 
in ore and bars without being coined, nearly half a million brought 
to the mint in the same year fiom our own gold region. But as 
the excess of the metaUic impoitation did not enter into circula- 
tion, but remained in the vaults of the banks, though it may 
have made those institutions somewhat more confident in doing 
business, and removed from their dealers a salutary caution, it 
caused no immediate depreciation of the currency from super- 
abundance. It was not till, in the course of events, we were called 
on for that silver, which was formerly sent to the East Indies, 
but the transmission of which was now rendered circuitous by 
the substitution of bills on Loudon, and the rise of this metal 
from this and other causes in the markets of Europe, that it 
was found advantageous to ship specie to England. 

Temporary fluctuations in price are also occasioned by specula- 
tions. Being governed by no definite rules, such operations 
Icnow no hmits. The commercial world seems indeed to 
be subject to periods of extraordinary excitement, which fre- 
quently have their origin in very slight causes. Thus in 1825, 
an epoch sufficiently memorable to be in the recollection of most 



62 

of us, a falling off in the supply of cotton was announced in the 
circular of a Liverpool house. The surmise was, in a great 
degree, unfounded, but the extent of the rise would have been 
wholly unauthorized, had the statement been true ; for, whenever 
the price of an article advances much l)eyond its cost of production, 
a substitution to a considerable degree of other commodities takes 
place, and the consumption of the enhanced article is proportiona- 
bly diminished. But, when the fever of speculation is raging, no 
one thinks of looking to the foundation of prices ; every one hopes 
to be able to sell at an advance, and is indifferent as to what may 
afterwards occur. The effect of a speculating mania is to raise 
prices by the very avidity exliibited by those who are under its 
influence, and by the competition which they create. Most of 
these operations are made on credit, but all credit, with the single 
exception of paper passing as money, which stands on pecuUar 
principles, must have an end. It does not create capital, but 
transfers its use from one person to another, and however multi- 
farious the transactions, the time must arrive for a settlement. 

As we have observed, the capital of a country is divided into 
fixed and circulating ; and it is only the latter portion, that can 
be diverted from one pursuit to another. In case of a pressure, 
the demand for convertible or floating capital is greatly increased. 
The capitahsts, who in a season of general confidence, had freely 
made loans on personal security, become excessively cautious. 
While there is rather an increased disposition for landed securities 
and government loans, those public stocks, which are not of the 
most undoubted crecht fall, and interest is paid not according to 
the principles, by which it is governed in a tranquil state of 
things — the prospective profits of the undertaking, but by the all- 
important consideration of preventing a declared bankniptcy. 
Borrowing, however, at an exorbitant interest has its limits, has- 
tened indeed by the usury laws, by which the number of lenders 
is diminished, and which, though their absurdity in principle and 
inefficiency in practice have been pointed out by every sound 



63 

inquirer into the nature of capital, still remain in our statute books, 
u relic of barbarism. 

The political economists, who consider the receiving of interest or 
usury as a compensation for the use of a pecuniary capital to be pre- 
cisely the same in principle as reserving a rent for the occupation of 
a house, may cite among the advocates of their cause, even the 
gi'eat reformer Calvin, who, on this subject, treats the authority 
of Aristotle and that of the Romish Church with equal disregard. 
" To the former " to use the words of Dugald Stewart, " he oppo- 
ses a close and logical argument not unworthy of Mr. Bentham. 
To the latter he rephes, by shewing that the Mosaic law on this 
point was not a moral but a municipal prohibition ; a prohibition 
not to be judged of from any particular text of scripture, but upon 
the principles of natural equity." 

1 cannot hope to effect what has been in vain attempted, and with 
equal force of argument by the Genevese divine, and the pliilo- 
sopher of Q.ueen's Square Place, but I cannot allow the present 
occasion to pass by, without adverting to the advantage, which 
the citizens of the interior of our state, and particularly the agri- 
cultural portion of it, derive fiom our having estabhshed a rate of 
legal interest above that of the neighboring states, and which is 
ordinarily higher than the market price of money in the City of 
New- York. Most persons for obvious reasons prefer investments 
near at home, and had capitaUsts not been tempted by an addi- 
tional per ceiitage, mUhons of dollars, loaned within the last 
two or three years, to the farmers of the west, would never have 
sought such investments. 

But to conclude this digression ; — when money can no longer 
be borrowed on goods, sales must be affected for whatever price 
can be obtained for them, and the competition among sellers 
then equals that, which previously existed among the purchasers, 
and makes prices fall as much below, as they had risen above the 
cost of production. Of the panics and destruction of credit atten- 
dant on there-action of all extensive speculations, no one conversant 



61 

with the transactions of our commercial emjMrium can he ignorant. 
But the equilibrium can never in any case, be but temporarily 
disturbed. The rise of prices leads to the exportation of gold 
and silver in preference to other commodities ; and where notes 
are issued on a specie basis, the bankers are of course obliged to 
contract their circulation. The hmits thus put on the currency 
would bring down prices, even if the other causes which we have 
assigned were not in operation, to the natural relation, which com- 
modities bear to specie, and trade would then, though after the 
sacrifice of the fortunes of individuals, resume its former channels. 

All articles are produced in order to be consumed. The only 
question is, whether they shall be used unproductivcly liy the capi- 
talists, or employed reproductively in the creation of other com- 
modities. When we say, that revenue is saved and added to 
capital, we do not mean to imply that it remains imaltered in form, 
but that instead of Iseing taken for the support of the capitalist 
and his family, it is realized and made to appear anew in other 
articles. 

Among the expenditures chargeable on every man's income is 
the tax for the support of government. The security of jjersons 
and of property is essential to accumulation, as well as to the en- 
joyment of our acquisitions. The same ride, however, applies to 
government expenditures as to all others. They should be as 
small as possible consistent with the objects in view, and most 
particularly should the public avoid imposing contributions for 
undertakings, which can be carried on by the resources and 
sagacity of individuals. The government, indeed, can seldom 
step out of its legitimate sphere of action, without ultimatelj^ 
injurmg instead of benefitting the common weal. 

The discussion of the constitutional power of Congress to engage 
in internal improvements is alien to these lectures ; but the ques- 
tion whether such works shall be carried on by individuals or by the 
pubUc presents some un})ortant economical considerations which it 
becomes us to notice. When a road or canal is commenced at pri- 



65 

vate risk, it is pretty certain that there is a reasonable prospect of 
deriving, either from the tolls or the enhancement of the property 
affected by it, advantages more than commensurate with the cost 
of the undertaking, while, on the other hand, there accrues from 
the mere disbursement of the pubUc funds a local benefit, which 
would, probably, in a majority of cases lead to visionary and ab- 
surd expenditures. Nor are such anticipations altogether hypothe- 
tical ; they are fully justified by the measures heretofore adopted by 
several of the states. All who are acquainted with the history of 
internal improvements in New- York, are aware that it was impos- 
sible to commence our great canal, without uniting in the 
same bill provisions for constructing pari passu one to Lake 
Champlain, and the subsequent legislation of our own state as 
well as that of Ohio and Pennsylvania will furnish examples of 
other cases, where it was necessary to sacrifice the resources of 
the community on unprofitable schemes, in order to induce a ma- 
jority of the members to sanction undertakings which presented 
fair prospects of public benefit. These difficulties, if Congress 
should authorize an extensive system of roads and canals, would 
be increased in proportion to the means at the disposal of the na- 
tional legislature, and the number of objects for which demands 
would be made on the treasury of the union, compared with the 
revenue and wants of a single state. For this reason as well as 
because the danger of extravagance and carelessness is the great- 
est where the responsibility of the agent to his employers is the 
furthest removed, if the public embark at all in the works to 
which we are alluding, it is obviously better that they should do 
so through the state than the general governments. 

But, in the present condition of the United States and of the 
world at large, it may well be questioned, whether there is any 
enterprize, which promises adequate remuneration, that the capi- 
tals of individuals, aided by the facilities which the institution 
of joint stock companies affords, are not competent to effect ; while 
the creation of interests in the government as a proprietor, distinct 
from those which appertain to it as representing the people at 

9 



large, may even tend to retard instead of advancing the internal 
improvement of the country. Far be it from me to say aught 
to detract from the just fame of the statesman, under whose 
auspices the noble work, which now connects the Atlantic with the 
western waters was commenced. The Erie canal was the pioneer 
in the numerous undertakings of a similar character, by which 
the trade of the interior has been made to centre in our great 
commercial emporium ; and, at the time of its construction, it could 
probably have been accomplished in no other way than by the di- 
rect interposition of the public. But it is no slight argument against 
further appropriations by government to such purposes, that an 
association of our fellow-citizens is, at this moment, preparing to 
propose to the legislature the application, on their own private 
responsibility, of the modern invention of rail-roads to the whole 
route between New- York and Buflalo, and that the principal ob- 
stacle, which they are likely to encounter, arises from the vested 
interest of the state in its own canals. 

But whatever may be the object to which the revenue is applied, 
the taxes should be so contrived, as to produce the greatest eflect 
with the least possible charge on the resources of individuals, and 
they should be levied on each member of the state in proportion 
to the amount of his income, combined with a due consideration of 
its permanence and certainty. The rules, which govern the dis- 
tribution of productions, will enable us to determine the effect of 
a direct tax on the owners of profits, wages, and rent. 

The amount which is paid by the people as " customs " is not 
the measure of the entire burden imposed by this tax. So far 
as duties on imports tend to induce a diversion of capital from the 
production of articles, for which a nation possesses greater to that 
of those for which it has less faciUties, they operate on the creation 
of wealth, in the same way as a decrease in the fertility of soil. 
Apart from the consideration of revenue, the injury to the consu- 
mers from protecting duties is the difference between the actual 
price of the foreign article or its domestic substitute, and the 
price at which the untaxed commoditv can be afforded from 



67 

abroad. That the price of the commodity made in the country 
is regulated by the natural cost of production, is sufficiently evident 
from the existence of restrictive duties, and from the laws, which 
establish the equality of profits in different employments. The 
difference, therefore, to which we have referred, is not perma- 
nently gained by the manufacturers, but is a pure loss to the 
country and to the world, arising, except so far as customs are re- 
quired for the support of government, from a misapplication of 
industry. Indeed, in order to allow capitalists to seek unfettered 
the investments most advantageous to them, and consequently to 
the nation, of which they are a part, v/henever a duty is laid on 
a foreign commodit}^, there should be a correspondent excise on 
the domestic. For reasons, however, distinct for economical con- 
siderations, such a system would not meet with much favor here ; 
nor is it likely that in ordinary cases, resort will be had to direct 
taxes. 

The revenue of the national government, independently of the 
receipts for sales of the public land, will, we have every reason to 
suppose, continue to be levied wholly on foreign imports. On the 
subject of taxation, therefore, as one of immediate practical appli- 
cation, oiu' investigations are restricted to the influence, which a 
choice of the articles selected for duties may have on the accumu- 
lation of wealth and the different interests of society. Wages are 
always materially affected by the cost of the articles consumed 
ty the laborers, but as in this country the market is far beyond 
the natural price of labor, much of the benefit derived from the 
reduction on necessaries would accrue directly to the poor, while 
what they do not gain in that way would go to increase the pro- 
fits of the capitaUst — the source from whence the funds for future 
employment are to he derived. 

The modification of the duties on luxuries would only directly 
affect the consumers of them, and as it would probably lead to 
their increased use, it would have but little influence on accu- 
mulation, and would consequently benefit but slightly the other 
classes of the community. 



68 

It is a particularly fortunate circumstance that by the reduction 
of the duties to the Avants of the country, after the payment of 
the national debt, if the tariff be framed on any general princi- 
ple, not even a temporary embarrassment can be occasioned to 
our mechanics, using that term in its ordinary acceptation. 

From the relative condilion of the United States and Europe, 
as has already been sufficiently shown, in om view of profits and 
wages, in commodities made by dkect labor, we have a natural 
advantage. A reference to the statistical tables of our commerce 
will further prove that the importation of such articles is too 
trifling ever to interfere with the productions of our mechanics, 
that they enjoyed the monopoly of the home market before the 
enactment of the present taiiif laws, and that they are now infi- 
nitely more injured by the high duties imposed on the raw mate- 
rial, than they can, possibly, be benefitted by any protection ac- 
corded to the finished commodity. 

With a foresight, indeed, similar to that which has led to 
the destruction of the French forests, the iron usually obtained 
from England, and which is sold there at $23,33 is taxed $37 
per ton, or 159 per cent, and on some descriptions of this useful 
metal, the price of which abroad is about $27,75 per ton, there 
is imposed a specific duty of .$78,40, which is equivalent to 282 f 
per cent, ad valorem. The effect of this tax is to induce us with 
a fuel comparatively unfitted to its preparation, and which costs 
a sum nearly equal to the whole onerous duty, to waste our capital 
in endeavoring to compete with a country, where bituminous 
coal may be procured almost by the mere act of appropriation. 

But the case of iron is worthy of oiu' attention on another ac- 
count, it affords one of the strongest Ulustralions that we can give 
of the sacrifice of the poor mechanic to the interests of the wealthy 
manufacturer. In consequence of the high duty on the raw 
material, most articles of hardware, wliich in no case pay 
more than 25 per cent, ad valorem, can Ijc imported at half the 
cost of the' iron required for their fabrication, and thus the Ame- 
rican blacksmith is driven from his legitimate avocation by a 



69 

system whicli professes an exclusive regard ll>r ihe interests of 
American industry. 

A discrimination in favor of necessaries, and higher coinpara- 
tive duties on hixuries would best comport with true scientitic prin- 
ciples, would best promote accumulation, and best uphold the wages 
of labor. But this could not at once be done, without inter- 
fering with vested interests, created under the faith of laws, which 
however unwisely enacted, are entitled to respectful considera- 
tion. No government ought ever to adopt rashly any measure, 
though it be expedient and proper in itself, that might have the 
immediate effect to injure materially any large portion of its sub- 
jects, and since human happiness is the end in view, and the ac- 
quisition of wealth only a means to its attainment, to disregard 
vested mterests would be as inconsistent with the principles of 
PoUtical Economy, as with the dictates of justice.-^ But the argu- 
ment drawn from this source has its limits. Pushed to an ex- 
treme it would render impracticable all salutary reform. If the 
consumers, and particidarly the poorer classes, would consent, in 
the spkit of compromise, to place the tax on all dutiable articles 
on the same footing, and if we have no surplus funds to serve as 
a source of incessant contention and of incalculable corruption to 
our national councils, it will be found that without including 
in the estimate the proceeds of the sales of the public lands, 
twenty or certainly twenty-five per cent, ad valorem, fairly calcu- 
lated on the imported articles now paying duties, will be adequate 
to all the necessary and proper expenditures of the government.* 

* These expenditures cannot legitimately be made to exceed twelve or 
thirteen millions of dollars — 

The foreign imports in 1829-30, were, $70,876,920 
Deduct articles free of duty, 12,746,245 



158,130,675 
Exports of foreign articles not free of duty, 12,067,162 



$46,063,513 
A duty on which of 25 per cent, would yield, 11,515,878 
In 1830-1, the gross imports were $97,032,858, and it is probable that their 
amount would increase with the extension of the freedom of trade, so that 



70 

In any change, which may take place, we would especially 
endeavor to free our merchants from those petty vexations con- 
nected with the present la\vs, from which the high and honorable 
character that tliey have ever maintained, should exempt them. 
Perhaps no system can be more vexatious to them, and at the 
same time more unfair to the consumers, particularly to the least 
wealthy part of the community, than the principle of minimum 
duties, which was first applied to cotton in 1816, and was ex- 
tended in 1828 to woollen goods. According to this system, 
while the rich man, whose clotli costs $i and upwards a yard is, 
in no case, obliged to pay more than .50 per cent., and if it is 
invoiced at f 2 50, only 40 per cent. ; baizes are actually imported 
on which there is levied a duty, of 225 per cent, ad valorem. 
Flannels and other similar articles, used by the poor, worth 6 
cents at the place of exportation would pay 360 per cent, 
were they not totally driven from our market by the regula- 
tions of the tariff, by which they are, however low the actual price, 
taken to cost 50 cents the square yard. The cloths for the 
negroes of the south fall under a different class of duties, and 
though taxed much more reasonably than the flannels and baizes 
required for our northern poor, pay, if they cost 9i cents a yard, 
150 per cent. But, from the fact that these high duties are neces ■ 
sary to effect prohibition, it follows that there is virtually given 
to the manufacturers for the coarsest clothing, in some instances 
nearly four times the sum for which the foreign article of the same 
quality could be obtained. Thus the consumers, who are told that 
they are paying duties of 40 or 50 per cent. — the highest ostensible 
ones in the tariff of woollens, are by means of this legislative leger- 
demain, made to contribute to the extent of from 100 to 3G0 per 
cent, on some of the most important articles of ordinary consump- 
tion, and the poor throughout are taxed for the necessaries of life 
far beyond what is imposed on the superabundance of the rich. 
In no country have there been fewer attempts at smuggUng 



the duty might hereafter be greatly reduced. The receipts from the public 
lands for ISSC are estimated at $3,000,000. 



n 

than in the United States, and if frauds have recently taken place, 
they are to be ascribed to the complex system, by which they are 
invited. It is incumbent on Congress to be cautious, lest 
they drive their fellow-citizens into a course, far less to be depre- 
cated for the loss of revenue, which it would occasion, than on 
account of the deleterious effects, which it might have on the 
morals of the community. 

It is not my intention to examine the American tariff in 
detaiL I have referred to it, in preference to commenting on the 
systems of taxation elsewhere adopted, as affording illustrations 
of the preceding principles more generally interesting and more 
practically useful than any which they could furnish. 

In the remarks, which I have conceived it to be my duty to 
make on some branches of our national policy, I am aware that 
I differ from many enlightened citizens, for whose opinions 
on other matters I entertain a high respect ; but I should 
have ill acquitted myself of the confidence which this most 
useful society has reposed in me, had I yielded, what I deem, 
the results of demonstration to the authority of any individuals 
however exalted, or permitted myself to be actuated by any other 
consideration than an ardent desiie to advance the cause of true 
science. While on this topic, I would take leave further to observe 
that the doctrines, which I have been endeavoring to inculcate, 
have not been hastily or unadvisedly adopted. They are the 
same in substance as those delivered by me, some years ago, 
(1826) before another institution in this city ;* and they have 
been confirmed and strengthened by all the opportunities which 
I have since enjoyed of examinmg the systems of our own and 
other countries and of studying the works of those writers, who 
have directed their attention to economical investigations. 

In conclusion, we may be permitted to express our sincere hope, 
that the unhappy dissensions among the people of the United 
States, growing out of the expediency of the protecting system, 

* The New-York Alhenseum. 



72 

will ere long be terminated. Those who believe, that their sec- 
tional or private interests are benefitted by a course of policy de- 
monstrably injurious to the country at large, and who reject the 
sound doctrines of economical science, should yet recollect, that 
power and right are not synonymous ; while, should our fellow- 
citizens of the South be inclined for a moment to overlook those 
glorious reminiscences, which belong to us as a nation, Political 
Economy would corroborate what a reference to modern Italy or 
Germany would sufficiently establish, that twenty-foiu" tariffs, with 
their attendant corps of custom-house officers stationed on the fron- 
tiers of every state, would be infinitely more injurious to the 
creation of wealth than any one tariff, however hideous its 
features. 



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